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CONVERSATIONS 



THE PRINCIPAL SUBJECTS 



Political Economy. 



BY ,/ 

WILLIAM ELDER, 

AUTHOR OF " QUESTIONS OP THE DAY, ECONOMIC AND SOCIAL." 




PHILADELPHIA: 

HE^RY CAREY BAIRD & CO., 

Industrial Publishers, Booksellers, and Importers, 

810 Walnut Street. 
1882. 






Copyright: 
WILLIAM ELDER. 

1882. 



COLLINS, PRIXTKK. 



— WOULD IT WERE WORTHIER — 
OF 

ALEXANDER HAMILTON, 

HENEY C. CAREY, 

STEPHEN OOLWELL: 

THE POLITICAL ECONOMISTS 

OF 

THE NEW WORLD 

FOR 

THE NEW TIME. 



PREFACE. 



This book is not intended for occasional reference, and I have 
equipped it with an index raisonn^, and not with a verbal index. 
The matters treated in it would aiford a very much longer list of 
items, but I would have the reader to be a student of the matters 
presented and discussed. A distinguished jurist of Pennsylvania, 
when he was a student, it is said, tore the indexes out of his copy 
of the Supreme Court Reports, and it is believed that he was all 
the better acquainted with the contents of the books. He in- 
tended to be a lawyer, not a case lawyer. He took notice, not 
notes, charging his judgment and memory, instead of a note-book, 
with the matter of his studies. 

A complete index to the topics herein treated would fill forty or 
fifty pages, although the text covers but three hundred. 

I think that the work itself will not be hard to read or under- 
stand. 



Washington, April 15, 1882. 



(v; 



CONTENTS. 



PAGE 

CHAPTER I. 
Political Economy .... 9 

CHAPTER II. 
Wealth 18 

CHAPTER III. 

The Growth of Wealth — Its Agencies 23 

CHAPTER IV. 

Man and Land — Occupation of the Earth ..... 27 

CHAPTER V. 

The Law of Migration and Occupation of the Earth by the Human 
Race 31 

CHAPTER VI. 
Rent 49 

CHAPTER VII. 

Commerce and Trade — Sources op Wealth 64 

Domestic Commerce as a Source of Wealth 66 

Improvement iu Travel and Transportation, a Source of Growing 
Wealth 70 

CHAPTER VIIL 

Substitution 72 

First, from the Animal to the Vegetable Kingdom ... 77 
Second, from the Animal and Vegetable to the Mineral Kingdom 77 
Third, from Animals, Vegetables, and Minerals, to the Imponder- 
ables 78 

From Inferior to Better of the same kind 78 

CHAPTER IX. 
Population . , .80 

CHAPTER X. 

Wages, Profits, and Interest 93 

(vii) 



Vlll 



CONTENTS. 



T 



CHAPTER XI. 
Monet 

CHAPTER XII. 

FUNCTIO.NS OF MONFA- 

CHAPTER XIII. 
Money and Prices ..... 

CHAPTER XIV. 

Standards — Gold or Siltkr, or both 

CHAPTER XV. 

Money, a Producer of Values . 

CHAPTER XVI. 



]\[oney of Account 



115 



121 



124 



134 



146 



149 



CHAPTER XVII. 



Credit Money 


CHAPTER XVIII. 


. 153 


Banking 




. 1G3 


Banks of Issue 




. 171 


Bank of Genoa 




. 179 


Bank of Amsterdam 




. 186 


Bank of Hamburg 




. 192 


Bank of England . 




. 194 


American Bank Expe 


ricnces 


. 208 


Our National Bank in 


g System 


. 212 


Bank of France 


CHAPTER XIX. 


. 221 


International Trade 




. 242 



. CHAPTER XX. 



Close of the Debate 



298 



APPENDIX A. 

Proportion op Bank Chf,cks, Bank Notes. Bills. Drafts, 
Coin, respectivkly in the Banking Business of England 
THE United States . . . 

INDEX RAISONNE 



and 




and 




• 


301 


. 


30.i 



CONVERSATIONS 



PRINCIPAL SUBJECTS OF POLITICAL ECONOMY. 



T. Teacher, y 

P. Pupil, > Dramatis Persox^e. 

D. Disputant, J 



CHAPTER I. 

POLITICAL ECONOMY. 

P. What is Political Economy? 

T. The answer to that question, Avhich happens to be a dozen 
questions in one, should be made in the drift of thought of the 
questioner. Let me try whether I can find your aim; first, nega-- 
tively: It is not Theology, though it is concerned with the provi- 
dential government which overrules the earthly fortunes of men. 
It is not Jurisprudence, though it does in its inquiries involve pro- 
visions for the peace and good order of society. It is not Politics, 
or the science of civil legislation, though it must be considered 
and have place in political constitutions and in their administra- 
tion. 

Affirmatively: Political Economy is primarily occupied with 
the laws, natural and social, which govern in the production and 
distribution of wealth in material things, with a constant outlook 
to the general welfare of society, so far as that welfare depends 
upon the necessaries, comforts, and luxuries of physical life. 

P. You said that my question is in fact a dozen questions in 
one. How can that be ? 

T. There are so many disputes among the authorities about 
the range of the system, its proper subjects, the kind of data and 



10 POLITICAL ECONOMY. 

of reasoning on which it should be based, or which it legitimately 
employs, that you would be in danger of getting a dozen different 
answers, and might, in the confusion of definitions, fail to clearly 
understand any one of them. One party, following J. Stuart 
Mill, holds that Political Economy is a deductive science, drawn 
from assumptions, or first principles ; another, after the school of 
Ricardo, that it is an inductive science, built upon elementary 
facts; another, among whom are August Comte, Stephen Col- 
well, Daniel Webster, and Napoleon Bonaparte, denies its preten- 
sion to be a science in any proper sense of the word, holding that 
at least it is only a system or assemblage of truths, which have 
no central or overruling law or principle. And when you come 
to hear them in the definition of the terms of art which they all 
alike use, you find them equivocal, contradictory, and uncertain 
in the inferences deduced from them. 

D. I thought that the principles of the science were so far 
certain and settled as to be sure directories in study, and even in 
legislative policy. Did not Adam Smith, the father of the science, 
give it exactitude and completeness ? Did not J. B. Say give it 
a symmetrical exposition and happy elucidation ? Does not John 
Stuart Mill follow in substantial accordance with the text of the 
great leader ? And can it be possible that the generally prevalent 
faith is Avithout any sort of Scripture authority ? 

T. All these authorities, and all other of the principal followers 
of Smith, agree that he did not attempt or intend the revelation 
of a Koran of economic faith. J. B. Say, the interpreter of The 
Wealth of Nations, who gave it the shape in which it has been 
used, says of it: "The work can only be considered as an im- 
methodical assemblage of the soundest principles of political 
economy ; an irregular mass of curious and original speculations, 
and of known demonstrated truths." J. 11. McCulloch, who wrote 
a commentary upon the work as close as that usually given to the 
Bible, contradicts his author in at least a iumdred particulars. 
J. S. Mill says, " The work is in many parts obsolete, and in all 
imperfect." In fact, a sufficient acquaintance with the history of 
Smith's school shows that his followers have completely overlaid 
him, and left nothing of him but a name to live. Moreover, they 
ha\e agreed upon no substitute or amended system. Daniel Web- 



POLITICAL ECONOMY. 11 

ster* said of Smith and his followers, " If I were to pick out with 
one hand all the mere truisms, and with the other all the doubtful 
propositions, little would be left." And Napoleon Bonaparte, who 
forbade the publication of J. B. Say's exposition of the Smith 
system, shortly declared that "if an empire were made of ada- 
mant, the political economists would grind it to powder." 

Now, while I would free you from looking to the authorities of 
our college text-books, and relieve you from mustering in squads 
of partisans, I do not intend to foster the conceit of free and inde- 
pendent thought while I invite it to do its own work, because I 
think that it is not all which a man swallows that makes him fat, 
but only that which he assimilates and incorporates, and makes 
his own. Tacit assent is not confirmation, and one's knowledge is 
just what he himself knows. 

D. Those opinions of yours seem to me to dispose of the study 
of political economy at the outset of the race, and spares its doc- 
trinal run. 

T. You are right, if the whole questioii in our proposed inquiry 
were which of the contestants is entitled to the stakes in the issue 
of a strife of speculation ; but, please to understand me, that while 
political economy is not and cannot be a science, as astronomy, 
chemistry, anatomy, and music ; and yet it may be, or in the end 
may become, a system, explanatory and directory in the conduct 
of societary and business affairs ; and as such is as worthy of study 
as any of the abstract, the universal, and the invariable, which is 
justly entitled to the distinctive name of science. Is not remedial 
medicine as worthy of study ; and are not its discoveries and in- 
struction as important to health as if the frame and constitution of 
man were a piece of clockwork, and as obedient in all its move- 
ments and aberrations to mathematical rules ? Consider, sir, the 
business of political economy is to deal with, redress, and direct 
the condition and conduct of communities, in conformity with the 
forces which rule their affairs ; and we are even more immediately 
concerned with the laws at work in it than with the absolute and 
unchangeable movements of the stars in their courses, whose opera- 

* Webster's judgment of the popular authors was delivered in 18.'50, 
before the publications of our American writers, Carey, List, and (JoIweU. 
It applied equally to Adam Smith, Ricardo. ISa,y, Maltluis, and McCiilloch. 



12 POLITICAL ECONOMY. 

tions Ave cannot control by any knowledge of them that we can 
obtain. The disorders of the social system are capable of remedy, 
and are the subjects of our agency. Wait a little, and you will 
see that some useful thinking may be done among the proper topics 
of political economy without exaggerating its province and juris- 
diction. 

B. It seems to me that quackery rests exclusively upon ex- 
perience, which is liable to all sorts of misinterpretation ; while 
principles, rightfully, direct practice, and, I thought, science is the 
only safe guide of opinion. 

T. Quackery and empiricism ! Do you recollect that the 
Baconian philosophy, otherwise called the inductive system, rests 
upon observation and experiment, and that it builds all its gene- 
ralizations, which it calls laws, upon facts as they happen to be 
understood, arranged, or clustered in kinds, and upon the general 
or governing principles more or less correctly educed ? The in- 
ductive system of reasoning, which has conquered the physical 
world, so far as it has gone in its triumphs, is simply and purely 
empiricism. A law or principle, according to the inductive sys- 
tem, is nothing but a general fact pervading the series or group 
under investigation, and is true only when all the facts of the 
group are known and justly valued. The facts of social operation 
are exceedingly complex and difficult of estimation. The prin- 
ciple of liberty intervenes, and makes them inconstant. There can, 
therefore, be no science of their phenomena. Yet, to think is to 
theorize ; and, within the strict limits of social phenomena, we 
may reason safely. Observing the proper limit of speculation, 
principles, restrained to their subjects, may be ascertained. So 
let us try to understand economic agencies as they severally work 
in the life and history of men and societies. What do we need 
to know except their forces in action ? This is all the knowledge 
that science has acquired of the lever, the screw, and the com- 
pound pulley. The use and the government of these machines, 
not the power, in its essence, are within our comprehension. 

P. You mean, I suppose, to consider the actual matters and 
things which enter into the life of individuals and communities ; 
and, to let general principles or deductions take care of them- 
selves, after the cautious way that scientists treat what they call 



POLITICAL ECONOMY. 13 

erwpirical laws, waiting for all the facts which shall afford a sure 
generalization. 

T. Not exactly that, and nothing more than observation and 
experiment afford of phenomena ; but all that we can know by ex- 
perience, and, along with that, all the light which assured final 
causes reflect upon processes that have an obvious tendency in the 
designs of Providence. 

B. Now you are mixing up morals and religion, creed and 
prophecy, with the certainties of fact, whose explanation, accord- 
ing to the inductive philosophy, should be found in themselves. Is 
this logical ? Is not the investigation of every branch of human 
knowledge distinct, and must it not be restrained within its special 
province ? Can speculative faith and assumed design be safely 
mixed in the search for the truths of science ? 

T. Preaching and practice, heaven and earth, morals and trade, 
are sometimes, and only too often, separated, and all the worse for 
the divorce in opinion and conduct. If man has a compound 
nature, and various and even conflicting impulses, can he be un- 
derstood, and the interactive phenomena in harmonious results be 
explained by any one simple, single, and disintegrated department 
of his functions ? If morals effectively mix themselves with mer- 
chandise ; if genius, which draws the known from the unknown 
by the a priori route of reasoning, is efficient even in mechanics, 
can you strip the body of business of its soul and spirit, separate 
the mortal from his immortality, and divorce his drift of daily life 
from his destiny, his self from the relations which ever modify the 
interests and actions of that self, and thus make of his animal, 
moral, and social appetencies, each a distinct and independent 
piece of machinery ? If man were only an inorganic clod of earth, 
you might investigate him in a chemical laboratory ; but in that 
complexity of his constitution, which makes him a universe in 
miniature, he must be studied in the assemblage of his functions, 
in order to understand him in his social relations. 

D. Would you let the fatalism of Mahometanism, the fantastic 
and blind servility to nature of Paganism, or even the speculative 
faith of Christianity, solve the problems of our earthly existence, 
and direct conduct in the world of terrestrial affairs ? 

T. No ; keep the several branches of inquiry to their obviously 



14 POLITICAL ECONOMY. 

proper subjects and methods of research, and for that very reason 
allow them all their respective forces in every case in which they 
are concerned, and in which they modify each other, and so affect 
the result of their combined activities. Chemistry, confined to 
its method and means of analysis, would make sad work in the 
theory of digestion. It can obtain the atomic constitution of the 
aliment and of the gastric solvent, but without the vital forces 
concerned, of which it knows nothing, what report can it make of 
the change of food into chyle, and of chyle into blood, and of blood 
into bone, nerve, and muscle ? What we want in economic affairs 
is the nutriment, the blood, the bone, and muscle of business, and 
therefore take the composite man, the society man, for our subject 
iu his entireness. 

I think that political economy, to be good for anything, is bound 
to explore the offices of the producer, the exchanger, and the con- 
sumer of the commodities which constitute wealth in material 
things ; and that it ought to derive thence useful instruction for 
the statesman, the moralist, and the religionist. I have seen the 
fragmentary man of your notion in a brickbat, in a worm, in a 
monke}^, but I never saw the complex man himself so severed into 
his constituents ; and I do not propose to consider him either as a 
couple of buckets of water, with certain grains of salts in solu- 
tion, or as a ground hog, or honey bee, or beast of prey, or any 
other animal ; but as a man, a being of higher functions and des- 
tiny than anything created for his use. 

D. If all my objections, even when they represent the very 
highest accepted authorities in the science, provoke so much preach- 
ing, I consent to waive them occasionally, that we may the sooner 
get at the substantive matters to be considered. 

T. Truths of tlie highest rank must have some use, for they 
rule and solve dependent problems. Generals include and explain 
particulars in their relations. 

D. AVell, if you must begin with outlines, lay them down, and 
then proceed to fill them with the particulars wliich they embrace 
and classify. 

T. There you are right. The deductive and the inductive 
method must be duly employed in the systematic explanation of 
those complex subjects to which they apply respectively ; and so 



POLITICAL ECONOMY. 15 

I start with the proposition that man is the centre of all the gene- 
ralities, and of all the specialties of fact and thought that are to 
be considered in the study of political economy, and that his de- 
velopment into constantly higher and better conditions is the proper 
aim of all science or study concerning hira. This ruling idea for- 
bids us to consider political economy as a mere system, science, or 
theory of exchange value, or of men only as agents in the produc- 
tion of commodities, for this is not the ruling end of human life, but 
only one of its ministries. 

P. Why, who ever thought of man, the monarch of the material 
world, as made only for the products of industry, — a machine, or 
a slave, in his terrestrial domain ? Does anybody suppose that 
the chief end of man in this world is to manufacture pins, balloons, 
or galvanic batteries ? 

T. Don't be surprised that there is a necessity for contradict- 
ing the theories which you have described as impossibilities. I 
do not intend to startle you with a list of the honored names of 
those who have baptized this heresy Avith the name of philosophy. 
The citations will come along as occasion demands. 

D. Your obvious grudge against the authorities whom the 
world at large receives and regards as sound in theory, and as 
guides in practice, must, I suppose, be indulged. 

T. The world at large has very little to do with " the dismal 
science" of these anatomists of melancholy and prophets of evil. 
The teachers to whom I refer have made themselves reporters and 
expositors of the market-house, and are busy underpinning it and 
explaining the policy of huckstering. They take trade as the 
inevitable and controlling order of things, and employ their logic 
in the explanation and justification of its disorders. For instance, 
Mr. Malthus teaches (and his English successors and American 
disciples follow him implicitly) that there is in the natural order 
of things such a necessary disproportion of food to population that 
only " war, pestilence, and famine " can check the ultimate anni- 
hilation of the whole race. Ricardo, on the possible productive- 
ness of land, sees no escape from general starvation but in the 
exhaustion of population by their premature death. McCuUoch 
says that, " from the operation of fixed and permanent causes, the 
increasing sterility of soil is sure in the long run to overmatch the 



16 POLITICAL ECONOMY. 

improvements that occur in agriculture and machinery." And 
John Stuart Mill, in his chapter on " The Law of the Increase of 
Production from Land," reproduces these horrors in all their 
hideousness, — the over-population of Malthus, and the constantly 
declining productiveness of land of Ricardo and McCulloch. The 
facts alleged in support of this gorgon theory of general provi- 
dence are the existing social disorders, accepted as the necessary 
results of the constitution of earth and man, and in it is a com- 
plete justification of all the resulting evils, wrongs, and tyrannies 
of society. Even Dr. Chalmers held that the system of English 
charities only multiplied the population, increased the evil of its 
excess, and are therefore unwarranted by enlightened philanthropy ! 
Call you the just indignation provoked by this libel upon Provi- 
dence, this doom of hopelessness upon man, a grudge! A theory 
so monstrous and so mischievous might, indeed, be passed over 
with contempt, but when it runs through and poisons every funda- 
mental of a system of popular instruction it calls for an unre- 
served protest against its wickedness. 

In the progress of our inquiries we needs must encounter the 
issues of this teaching, for they will be forced upon us ; and I 
notify you now that we shall find the monster which these authori- 
ties call political economy and social science hydra-headed. 

P. Pardon me for suggesting that I would prefer a catechism 
with the proofs to a controversy with the dogmatisms of the 
popular authorities. I have no more respect for the assumptions 
of scientists than I have for the guesses of sciolists, and I take 
no interest in the strife of words about them. 

T. We will, then, proceed to lay down the corner-stones of the 
edifice to be constructed. The lines drawn from them, like those 
of the mason, must determine the shape of the work ; and the 
plumb-line of proof, constantly applied in the process, will give 
the necessary stability. 

The subjects of political economy are man, and those external 
things which serve his earthly wants, which embrace his mental 
and moral nature, so far as these are involved in his societary 
relations, and the conditions and management of those material 
things and forces which are required to satisfy his necessities. 
Prominently among these requirements arc, first, association 



POLITICAL ECONOMY. 17 

with his fellow-man, as extensive and varied as his capacities. 
Second^ individuality, or the full development of the individual, 
for the reason that the greatest possible capabilities of the indi- 
vidual are promoted by the largest and most varied association 
with his fellow-men ; and, reciprocally, the most complete associa- 
tion with his fellow-men is essential to the quality and power of 
the individual ; and, resultingly, the duties, rights, and responsi- 
bility of the man are in exact proportion to the powers so culti- 
vated. 

D. This programme advertises you an out-and-out optimist. 

T. I am not a pessimist ; and there is no alternative but that. 

I). I don't see that one who takes things as they are, and en- 
deavors their explanation, must be either the one or the other. 
Truth usually lies between extremes. 

T. Before making the compromise, suppose you try to ex- 
plain, consistently with the fundamental dogmas of the dismal 
science which you accept, how you find place in it for the existing 
system of public charities, or even for the private benevolences of 
philanthropy ? If the miseries of earth are in the policy of its 
appointed fortunes, can you interpolate aspiration, benevolence, 
hope, and redemption among its provisions ? A theory, like a 
house divided against itself, must fall. And is it not safer, theo- 
retically, to attribute evil to disobedience of law and order, than 
to the necessary issue of the natural system of things 1 The Great 
Teacher, indeed, said : " The poor ye have always with you." 
But he also said, " Seek first the kingdom of God and his righteous- 
ness (that is, the divine order of earthly things), and all these 
things shall be added unto you, to wit: what ye shall eat, what 
ye shall drink, and wherewithal ye shall be clothed" (Matthew 
vi. 31). He stated the ways of God to man, which is a sounder 
philosophy of society than an endeavor to justify the ways of man 
to man. A mob is made of men in that form of society, but a 
portraiture of such an assemblage is not a true theory of human 
relations. The disorders of the most orderly communities of men 
are also so far a departure from the creative intention, and give a 
very exceptionable view of the social system in its purpose and 
prospects. The spring-head must not be judged by the puddle 
which it feeds. " Faith is the substance of things Jioped for, and 



18 POLITICAL ECONOMY. 

the evidence of things not seen," And there is just where the 
philosophy of observation and experiment fails to meet the prob 
lems of moral science. The inductive system has its province 
exclusively in the inorganic creation. It has never had any suc- 
cess in mental philosophy, ethics, civil government, or social sci- 
ence, or any remedial system of animal or societary life. It rules 
among the phenomena of celestial and terrestrial mechanics, but 
is utterly incapable of the expediencies demanded in the conduct 
of life united with liberty, or will acting upon motives. 



CHAPTER II. 

WEALTH. 

T. The first topic to which I shall call your attention is Wealth. 
I begin the discussion by defining the word. Our lexicons trans- 
late the word into other words, such as riches, large possessions 
of money, lands, or goods, affluence, abundance of the means of 
living, etc. They also give it the old English signification — weal, 
welfare. The proper economic definition is, wealth consists in the 
power to command the services of material objects. It measures 
man's attained dominion over terrestrial substances through the 
agency of natural forces. The promised dominion of the earth, 
the sea, and the air, in all their latent capabilities of service, are 
within our possibilities, but this rich gift is upon conditions. The 
charter reads, occupy and subdue (Genesis i. 28) ; conquer 
and enjoy ; know and command ; learn the secrets of the creation 
and govern it. Yet the heir of all things finds the elements so 
amply provided for his prospective use, everywhere in resistance 
to his dominion. The fields and forests of his wide domain mingle 
thorns and thistles with their oiferings of the fruits adapted to his 
needs ; the skies rain influences which, in their wild liberty, mix 
the hostile with the subservient ; the winds, that waft health on 
their wings, are also laden with pestilence and death ; his actual 
life is a battle with his insurgent subjects, and it depends upon 
himself whether it shall result in victory or defeat. In his igno- 



WEALTH. 19 

ranee and nakedness he is the slave of nature ; but as he acquires 
knowledge he gains its power, and grows into the mastery of his 
proper dominion. He makes the earth feed and clothe him ; he 
converts the seas into thoroughfares ; he harnesses the winds to 
his vehicles of travel and transport; and the treasures of the 
lightning are made to be the speediest and most obedient of his 
messengers. He learns the laws of his universe, and his achieve- 
ments follow in the wake of his discoveries. The world was created 
by a word, and is subject to its wisdom under the agency of the 
creature made in the image of his Creator. 

JD. Following an hypothesis, you anticipate experience. You 
borrow from immortality the light to illustrate the mortal ; but is 
not human science, or the science of human things, the result of 
actual knowledge ? 

T. I follow the light ahead. Your favorite guide is behind 
you, as if you walked backward. Your trusted experience is of 
the past, which casts only a shadow of itself upon your pathway, 
and usually darkens as much as it directs the pathway in discovery. 

D. The great Dr. Johnson, however, said: " Experience, which 
is constantly contradicting theory, is the only test of truth." 

T. Which is true enough as a test of problems, theories, and 
predictions, but certainly, the knowledge of the known is not a 
true test of the attainable unknown — the a priori leads the a pos- 
teriori at every step of advancement. Genius has intuitions and 
inspirations; talent is its pupil. Experience is limited to revision 
and has nothing of forecast ; it records achievement, but does not 
prejudge the future. Experience figures in social history as a 
blind beggar led by a dog, with a wallet of broken victuals on its 
back. How it staggers and squirms when it encounters invention 
which knocks its crutches from its support ! Come, sir, science, 
sound and alive, is not a dirge or an epitaph, but a reveille. All 
real progress in learning is daylight springing from the twilight 
of the accomplished into the brightness of the coming. 

P. I understand you to mean that wealth is the mastery of 
nature, and that political economy is not a mere science of values 
as McCulloch defines it, or of catallactics — a theory of exchange 
— according to Archbishop Whately, or that its measure is money's 
worth in service and trade. 



20 POLITICAL ECONOMY. 

T. No. I prefer the rendering of Stephen Colwell : " the 
theory of human well-heitig, as it relates to the production and 
distribution of wealth." 

P. This definition is to me an abstraction. Please tell us in 
what wealth consists — the substances or things in which it embo- 
dies itself. 

T. In this limited aspect of the subject, I answer that its sub- 
stantive forms are money, land, implements, machinery, food, 
clothing, books, furniture, ships, wagons, ploughs, and the like 
tangible objects of property ; and, along with these subjects of 
weight and measure by scale and rule, the intangible efficiency 
that there is in Ideas, and the great auxiliary of material wealth 
that there is in Credit. Substances are instruments and subjects, 
and their employment is under the direction of agents. Perhaps 
I can better meet your thought by a definition of Capital, which 
embraces tbiC materials of wealth, and the efficiencies which em- 
ploy them in human service. 

P. Does not J. S. Mill cover this ground satisfactorily in say- 
ing, " Capital is that portion of a man's possessions which he era- 
ploys in further production ?" 

T. That is the commercial meaning of the term, but not nearly 
the economical, if by "possessions" is meant only material things. 
All the effective substances and forces employed in production 
ought to be embraced in the technical term Capital. Surely an 
axe used in felling a tree is not more efficient in the production of 
lumber than the arm that wields the axe, and the will that com- 
mands and directs the effort. It seems to me that theoretic mate- 
rialism gets as stupid in logic as the brute matter to which it 
confines its consideration. 

P. Wealth and capital, according to your apprehension, are 
not identical. 

T. Not (^uite the same in substances and agents. AVealth 
properly includes all the substances and forces which give man 
the power to compel matter to his use ; while Capital, in its 
restricted meaning, embraces only the substantive things and their 
proper forces, employed in the production of commodities or values. 
Labok, in fact, has an equal right to be regarded as capital, 
because it is a fellow factor with all the material forces of pro- 



WEALTH. 21 

(luctive industrj. The only reason for treating it separately is 
on account of its mixed character of mechanic force and human 
capabilities, moral, mental, and physical. A laborer has his cap- 
ital in his bones and sinews, in his skill and will, for these are his 
"possessions employed in further production," and they are 
instruments as much as the tools through or by which he works. 
He is a man, a guest, not the ghost, of the fleshly tenement he 
occupies ; that tabernacle is his warehouse and the powers stored 
up in it are his capital in the work of production. We must keep 
the man in view always as the machinist, not the machine, in labor. 

P. Is real wealth measured by money or money's worth as we 
have it in statistical reports ? 

T. I must refer you to the definition already given for an ade- 
quate answer. It consists in the power to command the services 
of nature, and therefore embraces things that have no excliange 
value ; and in this it differs from the things which have a market- 
price under the laws and usages of society. Its constituent range 
from the simplest provision for the needs of the animal life of man 
up to the highest enjoyments of his mental and moral life. The 
means of supply to all these requirements are truly wealth — they 
are all "possessions which he employs in further production" of 
their several kinds of capital. The food required by the appetites, 
the clothing for the defence and adornment of the body, are no 
less and no more constituents of wealth, than are the beauty that 
feasts the eye with forms and colors, the music which charms the 
sense, or the knowledge which enriches the mind. Health is 
wealth ; and happiness, Avhich is properly defined the gratification 
of any and every active faculty in all their severalities and kinds, 
is so much of wealth, or in other words all utilities are riches. 
You perceive that I cannot constrain myself to measure wealth by 
the exchange value of commodities. I do not say that a hearty 
laugh, like a bushel of potatoes, is worth a dollar ; or, that the 
estimates ^f the market-house are the equivalents of the services 
rendered to the proper life of man. Whatever is the currency of 
the grand commerce which we have with the world of men and 
things around us is our wealth. Life is a system of exchanges, 
and all that we get and all that we give is the medium and the 
measure of value in our commerce with men and things. 



22 POLITICAL ECONOMY. 

D. To come down to business : The census valuation of the 
real and personal property of the United States is put in 1870 at 
thirty thousand millions of dollars, and the population at something 
less than forty millions. Do these estimates express or proxi- 
mately represent the aggregate and distributive wealth of the 
nation ? 

T. These sums are calculations of the principal exchange value 
of our possessions, and of the number of our people. But fol- 
lowing my idea of wealth, I ask, what dividend of current sub- 
sistence the principal yields, — what command it gives over the sup- 
ply of our wants ? The Rocky Mountains were prospectively and 
potentially worth all the gold and silver which they held, less the 
labor of extracting them, when the territory was occupied by its 
savage inhabitants ; but were those creatures any the wealthier 
for the principal value of their domain ? Things are worth what 
they yield. What was the effective value of the thirty thousand 
millions in the year 1873, when the country was bankrupt ? Were 
they available for half their nominal amount ? Or, a fairer instance, 
what is the capital value of the West of Ireland in a period of 
famine, measured by what it yields to its cultivators ? 

It is uses, not potentialities ; it is actualities, not latent possi- 
bilities, that make the Avealth which is the welfare of the owners 
of property. 

The British way of estimating the nation's wealth does not con- 
cern itself with a computed principal of exchange values, but looks 
only to the annual product of the nation's fixed property, and of 
the current industrial yield of its capital, labor, and trade. Nor 
does it take account of the stocks invested in industrial and com- 
mercial enterprises, but of the actual fruits and profits of business 
of all kinds. The authorities there are simply accountants of 
earnings ; they consider the rental, not the price of lauds, and 
the interest, not the principal of the funds invested. They do 
not assume the work of the principal by wliat it might do, but 
what it actually does do, in the returns it makes in employment. 
In this procedure the English statisticians arc wise, and escape 
the illusions to which our census valuations are so greatly exposed. 

D. The current service work of property is, indeed, only what it 
yields in profit, interest, or dividends ; but it must have some cer- 



THE GROWTH OF WEALTH — ITS AGENCIES. 28 

tain intrinsic value independent of changes in trade prices,, else it 
could not at any time command a price in exchange ; its possibili- 
ties, as well as its fruits, are estimated in its valuation in business. 
T. Yes, but remember that the benefits which it affords are just 
what it yields at and for the time. A man may own lands or 
stocks that have been, and may again be, worth thousands of dol- 
lars in market, but suppose that, during a business revulsion, they 
yield him nothing, would you call him wealthy; and what would 
you say of his welfare ? If well-being is really the meaning of 
the word wealth, he may live and die in destitution in spite of 
nominal past or future valuations. A man is wealthy whose prop- 
erty yields him the means of commanding an abundance of the 
commodities and services he requires. Our definition, therefore, 
holds firmly against all the accidents which affect the subject. 
Labor is the source of wealth or welfare, because it forces products 
or the yield of property. 



CHAPTER III. 
THE GROWTH OP WEALTH— ITS AGENCIES. 

T. Assuming, for the present, that wealth grows in all well- 
constituted societies, and, in proportion to their social and indus- 
trial development, we will get proof and the use of the proposi- 
tion by examining the laws operative in the process. Let me give 
you an index to the several heads of the inquiry : — 

We may accept Adam Smith's aphorism, that " labor is the 
first price — the original purchase-money — that is paid for every- 
thing ;" taking care not to abandon, as Smith did, this funda- 
mental principle, by limiting its force to that " rude stage of so- 
ciety which precedes the accumulation of stock and the appropria- 
tion of land." Mr. Carey's doctrine of labor value in all production 
is the proper correction of Smith's foundation principle, and under 
it we will consider the production and growth of wealth under the 
following specific agencies and forces : — 



24 POLITICAL ECONOMY. 



^i 



1st. Natural labor directly applied in production. 

2d. Labor-saving machinery, or artificial labor. 

3d. The resulting improvement in quality and quantity of com 
modities, agricultural and mechanical. 

4th. Improvement in transportation, foreign and domestic. 

6th. Substitution of the cheap and abundant supplies for the 
costly and scarce. 

6th. Facilities of commerce— money and credit. 

D. Pardon me for forming a pre-judgment of half-finished work. 
But I am puzzled that, in enumerating the sources of wealth and 
its elements, you give no place, much less the primary and most 
conspicuous place, to what economists call " the natural and inde- 
structible powers of the soil." There ought to be some place for 
the raw material of all commodities, unless you can make your 
industrial world out of nothing. If "Mother Earth" and her 
supplies were stopped, I think, your theoretic account of human 
wealth would have no ground to stand on. 

T. That last hit, -I own, is capital as a witticism ; but what is 
it worth in logic ? Let me, in turn, put a more pertinent question 
to you: Taking wealth in lanl property to be it^ ezchange value, 
can you tell me how much of its price is traceable to " the original 
and indestructible power of the soil ;" and how much is due to 
the labor employed in its improvement ? Take any lot of ground 
in any of our principal cities, charge it with the cost of all the 
labor which has given it its present worth in other things, — the cost 
of buildings, with its proper shai-e in the cost of the streets, the 
drainage, and of the police service, which make a part of its con- 
venience, and therefore of its value ; add the harbor improvements, 
the land conveyances of travel and freight, with so much of its 
valuable advantages as are found in its churches, school-houses, 
theatres, market-houses, libraries, hotels, parks, in its immediate 
vicinage ; its shipping and railroads ; its gas and telegraph ser- 
vice, and ail the social advantages which it has been made to 
command, all of which are chargeable to the accumulated worth 
of the premises, and then sec what is left of the present market 
value. That lot, in its natural condition, would not be worth the 
Itlanket that would cover it. 

D. Land has in itself advantages of situation ; for one instance, 
its neighborhood to market. 



THE GROWTH OF WEALTH — ITS AGENCIES, 25 

T. Labor made that market for it. It has no such advantage 
to the aboriginal Indian. 

D. What do you say of the water-power which moves machinery ? 

T. Just what I must say of the currents of air which work in 
human service as the streams of water do when they are captured 
and subdued. Like the ocean and the atmosphere in bulk, they 
are latently capable of service ; but they promote the growth of 
wealth just in the form and to the extent that human labor rules 
their inherent forces. 

Moreover, land has no such " indestructible powers " in the 
composition of value as the economic formula assumes. In the 
fields long cultivated all that give them natuial fertility has been 
exhausted, and artificially replaced often and completely. Matter, 
indeed, cannot be destroyed ; but its forms and the forces of its 
atoms do by use become incapable of their primitive services. 

2>. Would you treat land, and discuss its offices and uses, not 
as a vital and original force, or body of independent forces, but as 
a machine ? 

T. If thorough examination shall make manifest its conditions 
and its management in use to correspond to those other combina- 
tions of materials which we shape and arrange so as to give results 
of which they are incapable in their natural state, we shall see that 
an inresident vitality does not take any organism out of the cate- 
gory of mechanics. Machinery^ called for distinctiveness celestial, 
is by all authors and thinkers applied to the movements of the 
heavenly bodies whose appetencies are innate, as truly as are 
those of land. There is a mechanism of the human frame and in 
its offices, such as respiration, circulation, and locomotion ; and, 
as machinery, these functions must be considered, and may be so 
named, for the purposes of investigation and description. 

D. There is, nevertheless, something rather startling in a clas- 
sification forced to embrace the animate with the inanimate. I 
have not heretofore been able to see such connection between the 
substances of a mountain or of a meadow, and of a clock or 
steamboat. 

T. Keflect. The spontaneous products of the soil serve the 
irrational races without their management ; but, to become utili- 
ties to man, they must be converted by his administration into 
3 



26 POLITICAL ECONOMY. 

conformable supplies. He removes its trees and grasses, and sub- 
stitutes his grains and roots ; he ploughs its surface and sows tlie 
seeds, just as he digs the ores, and smelts and forges them into 
forms for his use. His instruments are all mechanical, and all 
their subjects are under its laws in his use of them. 

D. Still, the word machine is customarily given only to arti- 
ficial instruments, commonly consisting of various contributing 
and inter-active parts, which serve and regulate the intended ope- 
rations and effects. 

T. Well, you have just as accurately described the art and labor 
of agriculture in its government and modification of the eartli's 
innate powers, and you may, if you must, call the work vital 
mechanics or terrestrial, or by any other name that does not alter 
the facts. The struggle from ignorance and feebleness all the way 
up to maturity of knowledge of, and power over, nature, is a study 
in the use of the physical machinery of agents, instruments, and 
subjects. 

P. As words are instruments in the communication of thouffht, 
it occurs to me now that even language in its modifications of form 
is in an allowable and useful sense the machinery of converse ; 
that grammar is a co7istruHive system, more like carpentry than 
Lindley Murray's ideal definition as " the art of speaking and 
writing the English language with propriety," wiiich, l>y including 
lexicography and rhetoric, embraces too much, and confuses the 
art. He puts the vital or ideal into the purely mechanical proper- 
ties and uses of words, with the effect of vitiating every one of his 
definitions of the terms of the art. 



MAX AND LAND — OCCUPATION OF THE EARTH. 27 

CHAPTER IV. 
MAN AND LAND— OCCUPATION OF THE EARTH. 

T. Now let us proceed with the most general facts in relation 
to man's occupation and cultivation of the earth, which will em- 
brace both the laws governing colonization or emigration, and the 
rules in the selection of the kinds of land brought into occupancy 
and cultivation. 

D. The choice of settlements in the various parts of the earth, 
and the selection of soils for individual occupation and cultivation, 
may be matters of history, but cannot need the researches of the- 
ory. Man is, not like the beasts and birds, limited to special 
localities. He is cosmopolitan, with the world before hina where 
to choose, as Milton has it, and Providence his guide. It is clear 
enough that having the means of travel and transportation, he will 
choose the regions that are the most fertile and salubrious, and, 
in other respects, the best adapted to his use. Without doubt 
when land is abundant and population scarce, men will take the 
best soils and leave those of inferior quality to the next comers ; 
and so on, till the last arable acre and of the lowest quality is, in 
the end, of necessity taken by the last class in the grades of suc- 
cessive takers, Ricardo founds his doctrine of Rent upon this 
progressive decline of productiveness of soils. In the nature and 
order of things this process of individual appropriation is settled, 
and no other theory than that of choice, limited by opportunity, 
seems to be required. 

T. If in the whole round of speculation there can be found a 
theory utterly baseless, Ricardo's theory of Rent is that eminent 
one. In assuming its plausibility you have started a multifold 
variety of questions, which, I have the pleasure of informing you, 
have been settled against you by the most conclusive facts that 
theory can encounter. 

B. Pardon me. Ricardo's theory of Rent commanded instant 
and general acceptance. The political economists of reputation 
have never called it in question. The mere statement of his pro- 
positions makes them self-evident. Can there be anything doubt- 



28 POLITICAL ECONOMY. 

ful in them ? Allow me to state them in tlieir self-snpporting 
array. He assumes that -when the quality of land, No. 1 in fer- 
tility, is still open to occupancy, nobody will pay rent for any 
portion of it ; but when that prime quality shall have been all 
appropriated, the next comers, having nothing left tliem but quality 
No. 2, will of course pay the value of the superior productiveness 
of No. 1 for its advantages. Here rent begins, and so on the 
rent of the superior grades will increase through all the interme- 
diate qualities until, as he states it. No. 7 is reached. The use 
of each successive quality adding its value to that of the first and 
all the following grades. Surely No. 7 must pay the difference 
of value between it and No. 6 if it would make the exchange. 
The arithmetical progression of numbers is not more certain than 
this anti-climax of value in land occupation. The ver}' symmetry 
of the formula seems to carry with it all the harmonies of truth. 

T. You have stated the Ricardo doctrine of Rent with sufficient 
explicitness and accuracy ; failing, however, to face its horrid con- 
sequences, which both dishonor Providence and threaten despair 
to humanity; but, waiving all present objections to the moral of 
the fable, let me call your attention to some very obvious and 
familiar facts which your theory does not meet or dispose of. 
The primary fact is that Land in the state of Nature, and open 
to choice, must be subdued in order to be brought into service. 
Its forests must be felled, its swamps drained ; its mould must be 
broken up, and the seeds of the required harvest must be sown ; 
and the implements of the clearing and culture must be provided. 
The liberty of choice is therefore put under conditions. It is not 
merely a preference founded upon degrees of fertility or other 
conditions of situation. There must be a calculation of resistances 
in the selection. The rank fertility of the best soils may demand 
labor and capital which the pioneer does not possess. The richest 
of all, which he might otherwise select — the marshes that have 
drained the surrounding hills of their wealth for ages — are in 
open and obstinate resistance to his very limited resources. In a 
variety of prepared and perfected commodities a man will choose 
and take the best for immediate use, because he is not embarrassed 
by any conditions precedent to the enjoyment, but when there is 
resistance to be encountered, and acquirement must be the result 



MAN AND LAND — OCCUPATION OF THE EARTH. 29 

of a conquest, the case is changed. A schoolboy will not choose 
a contest with the stoutest on the playground. He Avill not choose 
a combatant away above his match, but will prudently refuse an 
antagonist any way from No. 1 down to his own figure if it hap- 
pens to be No. 5 or 6. It is not historically true that the pioneer, 
or any early settler of new lands, chooses the richest and best 
soils. He is not a match for them. It is matter of fact that, 
passing by and avoiding the bottom lands, heavily timbered, and 
those that are pestiferous with the exhalations of their abundant 
vegetation, which riots and rots on their surface, he chooses the 
hillsides, lightly timbered, well drained, and easily cultivated, 
consenting to climb up and down the acclivities until, in process 
of time, increase of capital, and of natural and artificial labor 
qualify him to invade the richer land below him. Do you know 
why the earliest thoroughfares of trade and travel in the middle 
States of this new country wound up and down the hills and ridges 
of their routes ? Can there have been any reason for it except 
that quality Nos. 3, 4, or 5, among the soils, was of necessity 
chosen by the first comers, and travellers and traders were obliged 
to plod the ups and downs and round-abouts to find the rest and 
hospitalities of their wearisomely indirect journeys ? In Penn- 
sylvania, a hundred years ago, the eldest son had the right of 
choice among the lands of intestate decedents. He took in pre- 
ference the hills, and left the hollows and low lands to his coheirs.. 
Many family quarrels began in that distribution, and some of them 
have not yet been healed, because the unfortunates of that early 
day were compelled to accept Nos. 1 and 2 which they then could 
not manage. The richest lands of the commonwealth which lay 
vacant for half a century, have since been opened and drained by 
our railroad companies, and the swamps have been converted into 
gardens, of a tenfold productiveness above the hillsides at first 
preferred. 

In the history of all settlements of land, every fact contradicts 
the basis assumptions of the Ricardo theory. Every fact and 
every instance reverses his order of progression from the better 
to the worse. The true progress is from the lower qualities of 
soil, from No. 5 or 6 or 7, upwards toward No. 1, which, by the 
bye, has never yet been reached, either in the British Islands or 




30 POLITICAL ECONOMY. 

in America. Turn llicardo's symmetrical table of grades, in the 
progress of settlement, upside down if you would have the truth 
of experience and find the governing law. The correspondence 
of this law is seen in the route of progress which men make in 
their government and employment of all other machines, imple- 
ments, and subjects of their industries. Q^hey began with stone 
axes, passing afterwards through those of copper, brass, and iron, 
until they arrived at steel ; from the distaff and the spindle to the 
spinning-jenny and the power-loom ; from the canoe to the steam- 
ship ; from the packhorse to the locomotive engine. Nowhere do 
they begin with the best subjects or machinery. Human progress 
is always in the same direction — from the poorer to the better. 
The question of settlement and occupancy of land does not rest in 
a choice of inherent qualities, but in adjustment of the chooser to 
the task of effective control. ]jet mo also cite the fact that the 
richest soils in the world have been abandoned, when the occupants 
became poor in capital and labor. The Campagna di Koma, and 
the Daccan in India, ai'e examples. The former, up to the gates 
of the Eternal City, once covered with tlie villas of its citizens, 
is now abandoned to sickly herdsmen, who arc exposed to the 
miasma of its uncontrolled fertility ; and Bishop Heber tells us 
that the tiger has returned to the jungles in a district of India, 
once the site of temples and towns. The declining forces of num- 
bers and means have surrendered the lands No. 1 in their natural 
productiveness, and retreated to the less fertile lands better adapted 
to their command. 

D. I am not provided with any adverse instances. There may 
be a beauty in theory which is not strength. I recollect that 
Newton's doctrine of gravitation was very effectually resisted by 
Descartes' notion of vortices or whirlpools of the planets. 

In some connection with your theory of the occupation of land, 
and, perhaps, dependent upon it, how do you dispose of the doc- 
trine that man is cosmopolitan and is capable of accommodation, 
through artificial agencies, to all climates and regions of the earth, 
and is thus distinguished from tlie inferior animals, who are 
hounded in their iiabitudes by soil, and climate, and by their 
dependence upon the spontaneous productions of the earth ? 

T. I dispose of the cosmopolitanism of man, — of all men alike, 



THE LAW OF MIGRATION, ETC. 31 

1 mean, bj denying it. The human race or races may, though 
inexactly, be called cosmopolitan ; but no family of man is so. 
The varieties of the race, taken in the aggregate, are destined to 
occupy and replenish the whole habitable globe ; and for this pur- 
pose a thousand stocks or families are distinctively and variously 
(][ualified, just as there are a thousand differences of physical ad- 
justments of condition in the thousand diverse regions of the earth. 
To prevent the entire race from desiring and struggling for any 
one location, each variety is fitted and qualified for the ultimate 
occupation of a distinctive region by a distributive impulse, not 
wholly unlike the instincts that dispose and limit the residences of 
the fowls of the air, the beasts of the forests, and even the fishes 
of the sea. 

Could harmony be provided for by an universal cosmopolitan- 
ism among men any more than among the inferior creation ? 
Depend upon it, a priori^ the entire occupants of the earth, in- 
cluding its human population, are governed by a law which, how- 
ever disturbed by accident, resulting from the modicum of liberty 
and casual accommodation accorded to man and animals, is ever 
working toward the purpose of the Creator. Is not this probable 
as it is necessary ? And shall we not hold words and current 
notions under correction, so far as they lead to error in opinion 
and mischief in practice : We must give this subject a special 
section. 



CHAPTER V. 



THE LAW OF MIGRATION AND OCCUPATION OF THE 
EARTH BY THE HUMAN RACE. 

D. The law of migration ! Instead of law, might you not say 
the liberty of migration. Freedom and capability of inhabitation 
seems to be the character of man universally. But you have a 
habit of contradicting the authorities whose teachings are so restful 
and so easily understood. 

T. In this case I am not irreverent ; I only invite you to un- 
lierstand Milton's oracle, "The world before them, where to choose, 



32 POLITICAL ECONOMY. 



^ 



and Providence their guide ;" — the condition annexed to the rep- 
resentative man's freedom of choice — the guidance of Providence. 
The law of migration covers this guidance, this general providence 
of the earth's economy, in a larger sense, probably, than Milton 
intended. It is a law of climate, mainly determined by isother- 
mal lines, by which freedom of habitat is limited ; and it is not 
affected by the freedom of casual travel, exploration, or invasion. 
In these movements the enterprising, the curious, and the restless 
have an exceptional and a temporary exemption from the restrain- 
ing conditions of their nativity. The law relates to and governs 
the permanent homes chosen by emigrants, with some allowance 
for the influence of acclimatization, of which even vegetables are 
capable. The laws of life are nowhere stifly inflexible. They are 
not chemical or astronomical, but vital, and subject to such modi- 
fication as gives our free agency in their management such limited 
control as shall serve our ends, but without interfering: with their 
ultimate tendencies. Man rules the creation, but the Creator 
overrules it. 

In the temperate zone we have a compromise of the extremes of 
climatic conditions and constitutions nearly alike, or not very un- 
like, so that the nationalities of the zone generally can adjust their 
differences to it, and wear them into conformity; but no broadly 
marked nationalities, with their differences of language, customs, 
religion, and of arts, are found out of their natal climates. 

The spirit of conquest and of commerce carries men all over the 
world and across the geographic zones ; but colonization closely 
follows accustomed temperatures and other physical conditions. 

The barbarous invaders of Rome came down from afar in the 
north, northeast, and northwest, traversing five degrees or more 
of latitude and a larger range of climate, into what we call a more 
genial, not a more congenial, region ; but they retired, after a 
temporary sojourn, into their natal homes. The Saxons could 
permanently inhabit England, for their native land lay in the same 
latitude ; and the Normans had only to cross the English channel 
to change their residence, without any important change of atmo- 
spheric conditions. The Moors held their place in Spain during 
lialf a dozen centuries, because all of soutliern Spain lies within 
tlie isothermal lines whicii bound the Mahometan conquests and 



THE LAW OF MIGRATION, ETC. 33 

settlements from the shores of the Mediterranean, through Arabia 
into Persia and India. Mexico lies in the same belt of temperature 
as southern Spain, and Cuba touches its borders. The Scandi- 
navians trace their origin to the Himalaya Mountains of Asia, 
having a climate similar to that of northern Europe. 

More remarkable than these instances are the facts of immio;ra- 
tion in our own country and time. Here the law of climate gov- 
erns colonization and migration with less exception or less variance 
of operation, I think, than are found in any other department of 
vital statistics. Allow me to refer you for the demonstration to 
Dr. Elder's "Questions of the Day," page 331. 

P. Let me interrupt — Does the thermometer or barometer, or 
both, give the scale of measurement for what you call climatic law ? 

T. By climate is intended heat, moisture, winds, and all atmo- 
spheric forces which mark the salubrity of the region to be occu- 
pied. Isothermal lines are the nearest general indications of all 
the agencies which aifect the life, health, and occupations of men; 
but let me caution you that on this point only the most recent maps 
are reliable, and that even these are not yet exact or complete. 

D. There are some exceptions to the rule, but I suppose you 
will claim that they prove it. 

T. No. Exceptions do not prove a rule, but on the contrary, 
so far as they go, they contradict and disprove it. Evidence is 
testimony to the truth, the whole truth, and nothing but the truth. 
That saying is one of the shabbiest that could be used to cover 
errors of speculation. 

Your apparent exceptions, if I may guess at them, are such as 
the world-wide rule of Imperial Rome. But I answer. that while 
she held so many diverse regions in subjection, she inhabited Italy 
only. Military posts and governmental agents were all that con- 
stituted her presence either north or south of her own belt of tem- 
perature. In this England and France resemble the ancient 
mistress of Europe, Africa, and Asia. They hold all their foreign 
provinces of unlike climate by their armies of occupation and 
officers of civil government; and these are changed in personality 
at very brief intervals. There were not so many as fifty thousand 
white persons in the British West India Islands when the colored 
population amounted to eight hundred thousand. In 1861 the 



84 POLITICAL ECONOMY. 

population of East India under English rule, was variously esti- 
mated at fi'om 135 to 200 millions, while the English residents 
amounted to only 125,945 persons, of whom 84,083 went to com- 
pose the British officers and men of the army ; 22,556 were men 
and boys in the civil service, and the whole remainder were 19,306 
women of European oi'igin. 

D. This law so proved, with the apparent exceptions so ex- 
plained, is as new in its announcement as surprising in its bearings. 

T. Yes. Even its discoverer, Henry C. Carey, was not aware 
of it until after he had published the last volume of his " Social 
Science" in February, 1859. Yet its exposition and demonstra- 
tion, to which I have already referred you, shows, by the crucial 
test of its application to the United States, that in 1860 only one 
person in every fourteen was found residing and sojourning out- 
side of their nativities, throughout the whole range of our im- 
mensely wide domain, while it was freely open to the emigrants 
of foreign countries and of the earlier settlements of the Eastern 
and Southern States. 

Allow me to think and say that the doctrine is proved. 

P. If this law of occupation of the earth be true, it must 
also be true that the broad differences in scientific attainments, 
religious beliefs, political institutions, and even the kinds of lite- 
rature and art must, as they arise out of the constitution of differ- 
ently endowed peoples, follow and conform to it. Do mental 
methods, systems of morals and of society, the fine arts, music, 
poetry, and the drama, attach to nativities and climates with a 
conforming persistency ? 

T. I don't happen to be an encyclopedia of history, arts, and 
sciences, but if tlie proportions of a Hercules may be safely 
inferred from the size of his foot, as one of the canons of criticism 
has it (^Ex pedc Jferridem)^ I may be allowed to believe in its 
consonance with all that I do know within the province of its juris- 
diction. I feel at liberty to say that the popular and the authori- 
tative notion of cosmopolitanism is opposed to providential law ; 
that its doctrine is absurd, and its endeavored reduction into prac- 
tical results is a mistake and must prove a failure. 

D. Mr. Seward is responsible for the announcement of an irre- 
pressible conflict between the North and the South of our Union. 
What say you to its necessary existence ? 



THE LAW OP MIGRATION, ETC. 35 

T. Mr. Seward affirmed only an irrepressible conflict between 
chattel slavery and republican liberty, but this arises probably out 
of causes more permanent in their nature and power than the 
incident of the rights of persons under political government. 
More to the point and bearing of our theme is the view of Alex- 
ander Hamilton, as it is given in the Federalist. He held that a 
division of the States, upon failure to adopt the Federal Constitu- 
tion, would strike an east and west line, making a solid South and 
a solid North in political organizations at its outset, which has 
since been nearly effected, and still threatens our national in- 
tegrity. This was prophecy, and it is in the possibilities of his- 
tory. Division, once begun, may go further, and give us a South- 
ern, a Middle, and a Northern nationality, with the centre of the 
latter upon the St. LaAvrence, and the other portion in Canada. I 
cannot infer a Western division, separated from the East, in the 
same belt of temperature, because the Rocky Mountains are not 
now natural divisions as in the olden times, before railroads and 
the telegraph obliterated such natural impediments to union and 
commerce between peoples naturally allied. 

D. Is there, then, such danger of secession in the natural law 
and constitution of things ? 

T. The natural laws are ever operative, but subject to modifi- 
cation, so far as voluntary agreements or conventions can effect- 
ively work under them. The aggregations of political States ac- 
cording to nationalities, and the severances of territorial domin- 
ions, forced by the craft of statesmanship and the mastery of arms, 
which are now going on in Europe, must go on until providential 
adjustments shall be realized ; until the most general order of 
the right man in the right place shall be settled. In the mean 
time Federal unions will grow as they are now growing into use, 
in which the severalties of everj^ people shall be respected and 
secured, and thus a general harmony will be attained. Differ- 
ences are not a ground of war. Diversity of parts, held in their 
proper relations, make up the most perfect organisms. The 
compromises of our Federal Constitution are its irregularities in 
operation. There are no compromises in the man — the model of 
society. All his functions are held in harmony by the adjust- 
ments of justice to the best uses and the greatest fi'eedom of every 
i)r2;an in the general frame.. 



36 POLITICAL ECONOMY. 

The relation of man to land is significantly expressed by the 
good old Saxon word Husbandman — a child of earth destined to 
be its lord ; a ruler, but not arbitrary ; a representative, as well 
as governor ; his own conditions a reflex of the conditions which 
he controls. 

I). To what issues do these abstractions tend ? Hj 

T. They are the elements of man's terrestrial welfare. They 
are the outline chalk-marks of the picture to be painted. The 
globe, with its atmospheric auxiliaries, as he finds it, is only an 
assemblage of possibilities, latent forces, put at his disposal under 
the laAvs inherent in them. 

P. I understood that, in the study of wealth, we must begin 
with the sources of our supplies — land and labor— land as the 
material, and labor as the efficient producer of things in forms for 
use. 

T. At the very first step of the discussion we must either 
stumble over or remove the theoretic obstacles which the political 
economists in vogue have thrust into our pathway. Malthus and 
his followers teach that " the one great cause that has hitherto 
impeded the progress of mankind toward happiness — that one 
which has caused the existing inequality in the distribution of the 
bounties of nature — is the constant tendency in all animated life 
to increase beyond the nourishment prepared for it^ Prepared 
for it ! What do these grumblers mean ? Is there any lack in 
the stock of materials capable of assuming the forms required for 
human service ? Are the mineral ores, the fossil coal, the stores 
of natural fertilizers, exhausted? Have sun-heat, electricity, and 
the treasures of rain and dew given out ? Has the whole surface 
soil of the wide earth been emptied of its vitality, or ever been 
tasked up to its capabilities anywhere ? Have the productive 
capabilities of the inferior animals failed to yield their tribute to 
our sustenance and service ? Oh ! the materials only are fur- 
nished, but the feast has not been prepared ; and how could the 
Creator declare, when reviewing his week's work, " It is very 
good," when it was prepared and good only for the herb of the 
field, the beasts of the earth, the fowls of the air, and the fishes 
of the sea; while man, for whom all these creatures were made, 
was left to dependence upon his own industry for the means of his 



THE LAW OF MIGRATION, ETC. 37 

support, — to earn, " in the sweat of his face," the means and sup- 
plies of his animal life ? Ah, luckless wight, — ah, heavy lot ! 
" Behold the fowls of the air : they sow not, neither do they reap, 
nor gather into barns, yet your heavenly Father feedeth them. 
Consider the lilies of the field, how they grow ; they toil not, 
neither do they spin, yet Solomon in all his glory was not arrayed 
like one of these." (Matthew vi. 28.) Was man made only a little 
lower than the angels, and not so well prepared for as the beasts 
that perish ? 

J). Interpreting the actual and true report of man's earthly 
history into a complaint, by the narrators, against the dealings of 
Providence, you treat it with a bitter irony, but, in fact, food- 
famines crowd the chronological tables of remarkable events. 
They recur in frightful frequency, accompanied with plague and 
pestilence. 

T. They never happen except in exclusively agricultural coun- 
tries, and where the agriculture is never any better than a system 
of land-robbery. The soil is not only a machine requiring treat- 
ment conforming to its properties, but it is also a bank of issue 
and deposit. The shareholder may draw upon it to the extent of 
his stock or the principal, but, when he becomes a borrower, his 
deposits must be kept even with his drafts. It honors no over- 
drafts. 

Famines are never universal, nor even prevalent over consider- 
able extents of territory. Food was abundant in Egypt when 
Israel was starving. Grain is often rotting unused in the neigh- 
borhood of regions that are in destitution. Mark, learn, and 
inwardly digest the ordinance of Providence that has made the 
whole variety of men's industries interdependent ; intending 
thereby a well-balanced employment of all their faculties and of 
their diverse agencies in the maintenance of social relations, in 
order that the many members of the grand man, or community, 
may work together in harmony, so that "the eye cannot say to the 
hand, I have no need of thee : nor again the head to the feet, I 
have no need of you." (1 Corinth, xii. 21.) The productive 
industries which are not under the skyey influences provide for 
the casual deficiencies of agriculture. When you can point to a 
case of famine in any country of diversified industries you will 



38 POLITICAL ECONOMY. 

have an instance calling for an extraordinary explanation. An 
island, or a district, depending for food upon a single root, and 
having no pursuits that supply the means of purchase, may starve 
in a bad year ;. but what is this against the bountifulness of pro- 
vision in a system of adjustment of means to ends? You may 
not believe in Edenism, the golden age, and the fall of man, but 
the manifest misgovernment of the earth, socially and industrially, 
must be considered in explanation of its catastrophes. 

D. But there is an unhappy disproportion of food products to 
demand in England itself, highly cultivated as it is, notwithstand- 
ing its large diversification of industries. The pressure of its 
population upon sustenance, even if only occasional, makes a hitch 
in the even run of your theory. 

T. But not in the proper effect of a complete variety of employ- 
ments. The matter of wages or earnings is the great factor in the 
fortunes of all that live by food and do not produce it. But, the 
direct and immediate relations of man to land are the subjects 
now in hand ; and accidents, incident to existing disorders, must 
be postponed till they can be treated in their proper place. The 
possible sufficiency of supplies for all the wants of life, conditioned 
upon the proper management of the great machine, presents itself 
first for consideration. 

Admitting that agricultural products differ from those which are 
usually styled manufactures in this, that they are not capable of 
an equally indefinite increase by any possible means applied; and, 
admitting that mechanical forces have a larger range of converting 
power over dead matter than cultivation has over the vital proper- 
ties of the soil, the limited demand for food may be met fairly by 
such limited capability of supply. Sufficiency, not infinity, is all 
that is required. 

It is held, however, that because arable land has measurable 
limits of extent, and also of fertility, and, that in some cases and 
places the utmost of its capabilities have been reached, while the 
apparent or prospective demand for its supplies is theoretically 
unlimited : let me answer this partial inadequacy by suggest- 
ing that the world is bigger than the biggest barnyard. The 
poultry, with their wings clipped, may scare at a threatened scar- 
city of food while their mouths arc multiplying a dozen times at 



THE LAW OF MIGRATION, ETC. 39 

every hatching. Domesticated fowls, with their prospects bound- 
ed by their yard fences, have no prevision of the granai'ies of 
Providence. 

B. The Reverend T. Malthus, David Ricardo, J. Stuart Mill, 
and J. R. McCulloch have been domesticated, indeed, but without 
losing their strength and skill of wing ; they have become house- 
hold pets wherever their works are studied, and their cluck and 
crow are familiar throughout Christendom. 

T. For the present ; but, for the future ! " that is as hereafter 
may be." Hold the fort bravely while your ammunition and pro- 
visions last, and die in the last ditch, as becomes a partisan. In 
the mean time let us be no respecter of persons, only grateful for 
the services they render us, and as respectful as allows us our own 
liberty of thought. 

To resume the dispassionate investigation of our subject. 
The limit of productiveness of the soil has, apparently, been 
reached in Belgium, in some localities in England, and in the im- 
mediate neighborhood of the largest cities in America. Usually 
land is in service in the temperate zones not more than two, three, 
four, or five months in the year. In some special places it is made 
to produce three crops in the season. And here and there gardeners 
and fruit-growers draw from an acre four or five hundred dollars' 
work of product. We have authority for saying that some seeds 
yield thirty, some sixty, and some one hundredfold. The miracu- 
lous multiplication of the loaves in the wilderness is cleverly ap- 
proached in the agricultural art and industry of China and Japan. 
These results prove the latent capabilities of the very least pro- 
ductive soils similarly situated. 

P. I have heard our general system of rural management called 
scratchiculture, and our treatment of the soil, scalping it, — terms 
that, I believe, pretty fairly describe both the indolent inefficiency 
and the savage violence with which our virgin soils are generally 
treated ; and it seems to me that a theory of things as they are is 
not a philosophy of natural law^ 

T. It is safe to say that all of Great Britain, Italy, Belgium, 
and France, that has pushed the possible fertility of their lands to 
their utmost, is not more than equal to the area of Pennsylvania, 
which measures 46,000 square miles, or 24| millions of acres. 



40 POLITICAL ECONOMY, 

Now Pennsylvania has but IJ per cent, of the territory of the 
United States, and the fully cultivated lands of the European 
countries named are equal to only the one sixty-sixth of the terri- 
tory of this Union, 

The proportion of the arable lands, Avhich are under any kind 
of cultivation, is a very small fraction of the quantity still waiting 
for the plough ; and remember, that those usually called arable, 
in no case embx'ace the best of all, — the marshes, swamps, and 
other waste lands that stand unavailable till abundance of labor- 
power, natural and artificial, and adequate capital, shall be ap- 
plied to their subjugation. It would not be extravagant to esti- 
mate the food-producing power, lying within the prospective 
domain of culture, at ten times the amount as yet put to duty ; 
and that not a fourth of the potential fertility of those already 
appropriated and worked has ever been extracted from them ; and 
that not a man that has ever been starved or stinted but could 
have been abundantly supplied by the surplus elsewhere produced, 
wasted and perverted from its proper use. It may be conceded 
to the pessimist theorists that the resources of sustenance from the 
soil, as from the seas, are neither unlimited in substance nor service 
for human use. The same thing might be said of sunshine and 
rain ; but if there is enough of these in store capable of appro- 
priation, if the thousand millions of men upon the globe have not 
yet conquered 10 per cent, of its surface, or so much as 1 per 
cent, of its capabilities of service, it is of no moment that a few 
garden spots, which could be covered by a lady's thimble on a 
medium sized map of the world, have been pressed to their utmost 
productiveness, 

P. If not irrelevant at this stage of our inquiries, I should like 
to know so much of the statistics of agriculture as are the proper 
data of its doctrines. One needs the facts and figures for conclu- 
sions so general as those Avhich you invite us to accept, 

T. Having postulated the sufficiency of the earth for the sup- 
port of all its possible inhabitants, experience, rightly understood, 
is competent testimony, and I proceed to adduce it: — 

England, which may be taken in the average and in the whole 
to be better cultivated than the other parts of the United King- 
dom, has an area of 32| millions of acres ; 27 millions, including 



F 

THE LAW OF MIGRATION, ETC. 41 

meadow and pasturage, are under tillage ; 2 millions of the pres- 
ently arable are uncultivated ; and 3 millions are moor and moun- 
tain, regarded as waste lands. Of these lands, those in the best 
condition are stated to produce about 46 bushels of wheat per 
acre, and, of course, a more than equivalent yield of roots, fruits, 
and other nutritious vegetables ; for while grains, that grow above 
the surface of the soil in their greatest fruitfulness, are measur- 
able by the bushel, the roots of the subsoil are as tons in weight 
or quantity. I have known one acre to produce two hundred and 
thirty dollars' worth of carrots and cabbages, against sixty dollars' 
worth of wheat, which, at the utmost, it would have yielded in the 
same market. I leave you to cipher out the relative value and 
service derived from these varied kinds of productions, and to strike 
the average of a due admixture of them. 

Suppose only three and a half millions of acres of English land 
were made to yield but thirty bushels of wheat to the acre, the 
product would be a hundred and five millions of bushels, or say, 
five bushels per head of the population. (This is the average 
consumption of that grain in the United States.) This proposition 
leaves twenty-nine millions of acres for all other vegetable pro- 
ductions, among which roots, fruits, and other edible vegetables 
yield three or four times more of sustenance than does the wheat 
grown for bread. Is it not clear that the lands of England are 
capable of yielding an ample subsistence, under high cultivation, 
for all their human and animal occupants ? 

I). But England in fact imports at least one-fourth of her food 
supplies. 

T. We are examining the capability of her lands, not the actual 
employment of them. Her misgovernment of her territory and 
tenantry has already introduced, and will end in a complete revo- 
lution of her monstrous abuses in the system of her government. 
Her conservatism is now rapidly running into a radicalism the 
most portentous that the civilized world has ever witnessed ; Law 
and landlordism have gone so far into extremes of abuse that the 
fundamental doctrine of property — " every man has a right to do 
as he will Avith his own" — is about to be overturned. Her theory 
and practice of political economy are the worst in all Christendom, 
and her example is no longer even quotable, much less directory 
4 



42 POLITICAL ECONOMY. 

in the production and distribution of wealth. But, directly to our 
subject. Fiance, whose political government is a rapid round of 
revolutions, has a stable economical system which is maintained, 
through all changes of civil rulers ; yet she not only feeds herself 
with all things except tropical products, but exports food in im- 
mense quantities. For instances of her abundance : In the year 
1821 her agriculture yielded five and a half bushels of Avheat per 
head of her aggregate population. In 1857 it had risen to eight 
and a half bushels, or three and a half bushels more i^er capita 
than Ave consumed. She produces twice our quantity of potatoes ; 
her beet-root sugar is more than seven pounds per head — in a 
word she is in all things, except such as her climate refuses, self- 
supporting. And her available means for meeting the enormous 
expenses of domestic and foreign wars are a world's wonder to-day. 

I presume that I need not speak in reference to our own coun- 
try — of its capabilities for the maintenance of its inhabitants, 
present and prospective. 

I may, if need be, when you are at leisure for the examination, 
furnish you with statistical tables of food production and supply 
of requirement, that will sustain the very boldest calculation and 
prediction of sufficiency, and of a constant increase of subsistence 
of all kinds, far in excess of the growth or requirement — supply 
actually in excess of demand. Verily " He giveth to all good 
measure, pressed down, shaken together, and running over." 

D. You insist upon sufficiency, but the term is bj' its own force 
relative to demand, and, is it not true that the numbffc" of mankind 
grows in a geometrical ratio, while food, under the most rapid 
practical improvement, increases only at an arithmetical rate ; that 
is, after the formulae of Mai thus, the human race is capable of 
multiplying one hundred and twenty-eight times in the eight quar- 
ters of two centuries, while agricultural products are not possible 
more than eight times ? 

T. A direct consecpicnce of this assumed rate of fecundity is 
that, if all that are born should live to threescore and ten, there 
would soon be no standing room left for the race on the face of 
the habitable earth ; but, as you say, sustenance is relative, and, 
therefore, the tendency to such a catastrophe may be found not in 
the provision for subsistence, but in a disproportioned production 



THE LAW OF MIGRATION, ETC. 43 

of life. Malthus assumed a constant quantity in the increase of 
population, and fixed the rate at the highest possible figure for its 
measure. But, that it is variable and not constant is one of the 
plainest facts of experience and observation. This matter must 
be postponed to its appropriate place in our study. Then Ave can 
inquire whether an excess of life occurs under the order of nature, 
requiring the remedy of premature death for the apparent blunder 
in the Divine appointment of means to their ends, or whether the 
bills of mortality rightly suggest a departure from, and an abuse 
of, the intended agency of man in the exercise of his functions. 
There is, indeed, much suffering in the life that now is, past, pre- 
sent, and in the immediate future ; but I suppose not more suffer- 
ing than sin, which is violation of law. I cannot even imagine a 
system of existence in which wrong shall get along as well as right. 
We are looking for the law of the subject. 

D. But the facts of history in all times and places— do they 
not support the teachings of what you are pleased to call the dis- 
mal school of the economists ? 

T. So far as they can support anything they do. But allow 
me to object that the disorders of misgovernment, the ill distribu- 
tion of the products of industry, the follies and crimes of ignorance 
and lawlessness, the potato-rot in Ireland, the cholera in Asia, the 
grassliopper plague in Wisconsin, the cotton worm in South Caro- 
lina, and the never ceasing emigration from Europe, are the pud- 
dles from which these philosophers drag up their data and fabricate 
their theory — grounds about as good for a system of providential 
laws, as a street riot affords for a philosophy of societary organi- 
zation in conformity to nature and order. How these interpreters 
of the mysteries philosophize upon the facts which disorder 
supplies ! 

B. Your theory is probably calculated for the millennium. 

T. It is predicated of the harmonies of nature, used as a 
straight-edge for detection of the departures of human conduct 
from the order to which man and his circumstances are made 
responsible. I would have a standard of abiding truths, not a 
jumble of accidents and errors, for a science of life. A standard 
is an aim, a rule of criticism, a directory for amendment. It is 
not a justification of evils, and cannot be made a waz-ranty of 



44 POLITICAL ECONOMY. 

opinion and conduct until "whatever is is right." The changes 
■which are improvements of the past are well approved by their 
effects, and the improvement of the future under direction of the 
absolute best may be allowed, even if it does keep an eye on the 
millennium, as a wanderer in the dark takes the stars for his guide. 
P. Do you fimi a constantly growing stock of food supplies 
both in England and France? 

T. In England, to-day, land yields fully five times more than 
in the time of Henry the Eighth. Elizabeth's maids of honor 
were regaled upon beef and beer ; vegetables and cultivated fruits 
were imported rarities. The wild boar's head Avas the crown of 
the franklin's feast ; and the sirloin of beef took the honor of 
knighthood at the nobleman's table. Wines of foreign production 
abounded in the carousals of the wealthy, when a shirt, clean or 
otherwise, was not in the toilet of the most luxurious. The six- 
teen quarterings upon the shields of the descendants of the Norman 
conquerors are just as true measures of the increased productive- 
ness of these landed estates as of their rank in the records of the 
herald's office. These landlords, or lords of the land, grew with 
the growth of the soil they were originally made of. The cor- 
respondence is a fixed law. Increase in the conditions of man 
tallies, step by step, with those of the earth he sprang from and 
lives on. The real wealth of a people is indicated by the value 
of their fixed property, not by that of their movables, for the sov- 
ereignty of the soil is measured by its improvement, or its sub- 
jection under the conditions of the great charter recorded in 
(ji-enesis, chap. i. v. 28. 

The land over which the savage roams is not a subject of owner- 
ship ; it is not a property, but a temporary use, such as it is to 
the beasts and birds. His wealth is all in personal and movable 
goods. The measure of the wealth of every nation, of every State 
in this Union, and of every district in it, is found in the prepon- 
derance of its real-estate value over its personal property. 

P. Will this rule of estimation hold in particulars and in de- 
tail, as well as in the general, which seems to me well supported 
by the reason of the thing? Real estate is a permanency; per- 
sonal is evanescent, consumed in its intended use, and its value is 
a matter of conventional estimate. 



THE LAW OF MIGRATION, ETC. 45 

T. For an instance which fairly covers the general application 
of the rule: In 1860 the total census valuation of the rebel States 
was $2,289,029,642, of which $842,927,400 was in slaves,— more 
than one-third of the total amount. The real estate of those 
States, as estimated by the marshals, was then 43 per cent. ; and 
the personal of all kinds was 57 per cent, of their property. At 
the same time the average of real to personal estate in Pennsyl- 
vania, New York, and Massachusetts was 75 per cent, of their 
total valuation. South Carolina, Georgia, and North Carolina 
had but 80 per cent, in real estate, against 70 in personal. The 
proportion of real or fixed property in exchange value to its float- 
ing capital is the true measure of a nation's wealth and of its 
grade in civilization. 

P. I see that this rule holds in the estimate of the aggregate 
money-worth of a nation's property, but the welfare of a people 
must depend upon the distribution of productive capital ; and, in 
consequence, the permanency and availableness of the aggregate 
to the general welfare. How do France and England compare in 
this respect ? 

T. In England the lands are being concentrated in the hands 
of a constantly decreasing number of proprietors. In 1688 there 
were 840,000 landholders. Adam Smith puts the number in 1776 
at 200,000. In 1822 they were reported at 32,000 ; in 1861, 
30,766. To-day 100 persons own 4,000,000 acres. In keeping 
with this monopoly in England 12 persons own one-quarter of 
Scotland, and 744 own more than one-half of the soil of Ireland. 
Such an allotment must be disastrous to the mass of society, and 
so, essentially to the few, who at last depend for their prosperity 
upon the general welfare of the community. 

France is governed by a different policy, with a corresponding 
difference of results. Her lands are, for the most part, divided 
in ownership to the last possible extent. The law of March, 1793, 
conforming to this tendency, contributed to its prevalence by abol- 
ishing testamentary freedom, obliging parents to make an equal 
division of their landed property among their children. The result 
is that the present proprietor of his acre or two is a husba7idman ; 
he is wedded for life to the soil, and cultivates it as ownership only 
can induce. He does not emigrate ; he is not a tenant at will of 



46 POLITICAL ECONOMY. 



n 



. the field, nor a nuisance in the highway. He views every inch 
of iiis little domain with the affection which the smaller properties 
always inspire ; and ho is, in the language of Adam Smith, "the 
most industrious, the most intelligent, and the most successful of 
all improvers." 

An English authority, comparing the respective tendencies of 
these different land policies, says : " English laborers, at the best, 
save not more than one-fifth of their earnings ; but the economy 
of the corresponding French laborers saves four-fifths." It is the 
intended investment in land that incites them to the utmost pru- 
dence in expenditure, which, while it brings him a little wealth of 
independence, takes as good care of his morals. 

P. If such are the results to the individuals, the constituents 
of the community, they must appear in the common wealth. 

T. The ability of France to pay and provide for the paynaent 
of above 1800 millions of dollars of debt in less than three years 
after the most costly and destructive war in modern history — em- 
bracing the German indemnity, with the added current expenses 
of the war, foreign and communal — indicates greater strength 
than England could have commanded in present payment from all 
her resources. Of all the nations, the United States alone have 
met an equal pressure upon their resources with equal success. 

When, in 1854 and 1855, Louis Napoleon turned from the 
backers and millionaires to the common people for the immense 
loans which he required, he was offered three times the amount 
called for. The subscriptions of the people residing outside of 
Paris in a single twelvemonth amounted to $429,800,000 more 
than the amount asked for, — 43 per cent, beyond the demand. 

F. I notice that you have said nothing about the progress of 
agriculture in the United States ? 

T. The progress or movement has l)een so irregular here, and 
the extended cultivation of the new lands of the great West has 
so confused the meaning of the general reported results, that the 
capabilities of the soil under improvement are not clear enougli for 
the purpose of inquiry. Moreover, our vast inheritance in land, 
in its fresh fertility, has hitherto worked effects, such as enormous 
estates usually do when they descend to prodigal heirs, who can 
neither see nor fear an end to them. 



THE LAW OF MIGRATION, ETC. . 47 

Our history of agriculture is one of superabundance under 
wastefulness. The aggregate income has happily covered the 
extent of the destruction ; but in the test cases 'it is confirmatory, 
both negatively and affirmatively, of the doctrine we are main- 
taining. The history of the worst indirectly supports the infer- 
ences from the best. The consequences of the violation that rules 
in the relation of man to land are found in such statements of fact 
as are here given : — 

Silas Wright, Governor of New York, said, in 1848, that before 
the Revolution of 1776, twenty to thirty bushels of wheat was the 
common crop in the county of Albany, and that it had then fallen 
off to twelve. The Plough, Loom, and Ayivil, an ably edited 
agricultural paper, supports this statement, saying, in 1848, 
" The yield of wheat per acre, twenty years ago, in the State of 
New York, averaged twenty bushels, but has declined to twelve ; 
and that, in the comparatively new State of Ohio, the average 
had been twenty bushels, but had fallen in twenty years to ten or 
twelve. Governor Wright also said that, in 1798, the Indian corn 
crop, which w^as as high in New York as one hundred and twenty 
bushels to the acre, had, in fifty years, fallen to twenty-five. So 
much for "the indestructible powers of the soil" of the econo- 
mists of the school in vogue. 

Governor Wise, in an address to the people of Virginia, a little 
while before the outbreak of the great rebellion, described the 
ao-riculture of the State as scratchiculture and land-butchering in 
this style : " Your inattention to your only source of wealth has 
seared the bosom of mother earth. Instead of having cattle to 
feed upon your thousand hills, you have to chase the stump-tailed 
steer through the sedge-patches to procure a single beefsteak. 
Tne landlord has skinned the tenant, and the tenant has skinned 
the land, until all have grown poor together." 

Our agriculture is a subject for pathological, not for physio- 
logical, science. The better examples are found only where land 
has been properly treated. 

D. You make the great productive machine cost extravagantly 
in working expenses and repairs to afford the chosen examples of 
its highest product. Is not the required investment quite beyond 
the means of the ordinary and average farmer ? 

T. Under natural laws issues depend upon, and are proper- 



48 POLITICAL ECONOMY. 

tioned to, agencies My object is to prove the possibilities of the 
provision in store for human necessities. If I argue from the 
example of lands 'that are highly cultivated, without considering 
the cost to be encountered in bringing up the inferior qualities of 
land, and of subduing the best that are waiting their turn and time 
for service, I am inviting you to see the law of harmony between 
the growth of numbers, increase of wealth and power, and the 
improvement of machinery, on which progress is conditioned, and 
which is now manifesting itself, step by step, as the demands for 
masterly cultivation proceed. Remember the terms of the great 
charter, " Increase and multiply, and replenish the earth, and 
subdue it," that you may have dominion over all the realms of 
your appointed sovereignty. 

Why should wheat, fruits, and roots, adapted to human use, be 
produced in advance of the need, only to rot in a surplusage be- 
yond the current requirement ? Nature is an economist of means 
and agencies. 

D. Instead of limiting political economy to its usually assigned 
province, "the production, distribution, and consumption of wealth;" 
instead of confining it strictly to a system of exchanges of market- 
able commodities and other values, which has been generally 
held by the authorities in the science and in popular regard to 
cover at once the industries and the commerce of men in society, 
you make the general welfare of communities, in all their earthly 
interests, the subjects of its laws. 

August Comte insists upon treating the complex relations of 
society in solidarity ; but, I think, the most capable of his critics 
follow the analytic method, such as has been successful in the 
investigation of the inorganic creation, and even generally in the 
vital and moral departments of science. 

T. I cannot think of a steam-engine in action by confining my 
notice to the coal or the water which give it its impulse. I must 
take the whole machinery of the assemblage of modifying and 
inter-dependent forces in all their relations. I do not believe that 
the measurement of a granary, the invoice of imports and ex- 
ports, or the reports of the money market, make up the whole study 
of man's material conditions. I cannot sever him from his rela- 
tions and dependence upon external things. Theoretical barriers, 



RENT, 49 

set up by systematizers, between theology, ethics, politics, and 
industrial affairs, disintegrate the man. I accept all the ologies, 
held within their proper provinces, as tributary sources of informa- 
tion. A chemistry of man does not include his life. When a child 
breaks a saucer he holds the pieces together and says, " That's the 
way it was ;" but the fragments lack their structural connection. 
I understand it better in its entirety, for in that the use consists and 
is manifested. I believe that Comte's method of treating the social 
functions and relations in the ensemble^ has never been successfully 
refuted. 



CHAPTER VI. 
EENT. 



T. Agriculture, being the pursuit that requires acquaintance 
with the most numerous branches of the natural sciences, if not 
the largest amount of knowledge in them, is necessarily latest of 
full development. It must wait for completeness, until chemistry, 
meteorology, vegetable physiology, and machinery shall have done 
their best for the uses of cultivation. As yet the relations of man 
to land are not availably formulated for the use of theoretic dis- 
cussion. Some parts of this great body of knowledge are well 
enough ascertained for use ; but even these are subjects of differ- 
ence and dispute among economists ; the strongly contested and 
most unsettled among its questions is the theory of rent. As the 
problem presses upon the thinkers and legislators of England it 
seems a gordian knot so difficult to untie with logic that it is about 
to be cut by the sword of absolute authority. The House of Com- 
mons has given it the first chop with the last argument — the bat- 
tle-axe of force. The lords, for the present, protect themselves 
behind the shield of tradition, — a stern gun fired in a retreat, — 
that must end in a surrender. Such is British political economy 
applied ! The theory of Ricardo under treatment has exploded, 
and all its elaborate justifications are in rubbish. 



50 POLITICAL ECONOMY. 

P. You have spoken of economic rent, by which, I suppose, is 
meant the theoretic or logical apportionment of the product of land 
to the owner and tenant, or farmer, respectively, — ^the distribution 
of benefits of invested capital and labor. In this respect agricul- 
ture is distinguished from the profits of other industrial arts, and 
from the fees and salaries of offices, and the rewards of the fine 
arts. I think this is the doctrine of the accepted authorities. 

T. This doctrine is the subject of dispute. The authors to 
whom you allude put land upon a different economic basis from 
all other machinery of industrial production. They separated such 
natural and indestructible agencies in land as do not belong to any 
of the things that perish in their use. J. S. Mill holds that " the 
land of a country presents conditions that separate it economically 
from the great mass of the other objects of wealth." He puts the 
diflFerence thus : " Movable property can be produced in indefinite 
quantity, and he who disposes as he likes of anything which it 
can be fairly argued would not have existed but for him, does no 
wrong to any one. It is otherwise with regard to land, a thing 
which no man made, which exists in limited quantity, which was 
the original inheritance of all mankind, and which, whosoever ap- 
propriates, keeps others out of its possession, such appropriation, 
when there is not enough left for all, is, at first aspect, an usurpa- • 
tion of the rights of other people." 

P. Why agrarianism, in its extravagance, communism, and even 
nihilism, got a firm foothold here, and Laissez /aire gets the go- 
by at the same time. Is English theory of political economy, 
like that of the French Proudhon, based upon the axiom, "Prop- 
erty is robbery ?" 

T. Property in land, you mean ? If that property, though it be 
in fact like any otiier property, wholly due to labor and capital 
applied to its creation, is based upon a diffei'ent right, or no right 
at all, the theory is answerable for the result, — it is no man's 
land. Every occupant is an usurper ; but, curiously enough, not 
of the rights of other people, for nobody has any exclusive right 
to any portion of it. 

P. As you put the point, the argumentum ad Itominem runs 
fairly into the ar (lumentum ad ahsurduin. 



RENT. 51 

T. I am right. Professor Cairnes* goes the full length of this 
logic. He denies a natural right of property in anything, " even 
in that Avhich our hands have just made." "It is not right," he 
says, " that it should belong to us because we have made it ; but 
it is expedient that property so acquired should belong to him who 
so acquires it." 

P. What is the end of all this theorizing ? 

T. It has no end. It is compelled to reason in a circle. It is 
invented to support the proposition that, " in whatever manner the 
plans are made, that promise to be effectual (in amending the land 
laws of Ireland), they involve at bottom the principle of depriving 
landlords of the power of raising rent ; the principle, therefore, of 
imposing on the State the obligation of saying what a fair rent 
?'s." I said these people reason in a circle. Professor Cairnes, 
like a mouse that goes in by the same hole he came out at, after 
a play in the moonshine on the carpet, hedges his theoretic ven- 
ture by conceding that, " so far as the productive qualities of soil 
have been permanently improved, the added value rests upon tlie 
same foundation as property in corn, wine, or houses." 

D. The evil of rack-rent (the full value of the premises, or near 
it), and of the unrestricted liberty to fix its amount, so severely 
felt in England and Ireland, must admit of some remedy. 

T. And the theory of the economists must be reversed to admit 
that remedy. 

P. What is the true theory of rent ? 

T. A safe basis may be found in certain fundamental proposi- 
tions which are to be credited to the system of Mr. Carey. Ac- 
cording to his doctrine land is a machine in functions and uses ; it 
is under the laws which govern all the productions of labor and 
skill. Its so-called original and indestructible powers make no 
part of its exchange value. Its value is wholly due to labor, in 
the comprehensive meaning of the word. Postulating these proposi- 
tions he proceeds to general principles, which are self-proved. 
There is a law of uniform relation between the quantity of capital 
employed and the quality of the labor in a community, — a law 
connecting every increase and every diminution of the former with 

* Professor of Political Economy, University College, Loudon. 



52 POLITICAL ECONOMY. 

a corresponding improvement and of deterioration of the latter. 
Tn other words, the active and passive agents in production are 
married together "for better, for worse," — principles which are 
resolvable into the following corollaries : — Labor gains increased 
productiveness in the proportion that capital contributes to its 
eificiency, just as the inclined plane, lever, and screw augment the 
power of the hand that employs them. All the implements of the 
industrial arts, as well as food and clothing, are supplied by capital 
in the equipment of the laborer. 

Every improvement in the efficiency of labor so gained by the 
aid of capital is so much increased power of accumulation, which 
grows usually as compound interest grows upon its principal. 

The increase of accumulated capital resulting lessens the value 
in labor of products already existing, and brings them more easily 
within the purchasing power of present labor, for the reason that 
no commodity, however much labor it may have required for its 
production, can command the value of more labor than is required 
for the reproduction of the like thing, or its substitute at the time. 

B. These generalities are entirely admissible ; but how do they 
apply to the value and to the rent of land ? 

T. If all the advantages of land which command rent are due 
to labor in the last analysis, its pi'ice of value must come under the 
common law which governs all the other productions of capital and 
labor ; and the title to them is the same as that in all products of 
industry. 

D. Admitting the government of these general laws, how does 
it happen that land prices and rents rise constantly with the rising 
demand for the property in, and for the use of them ? 

T . To answer this question, I must call to my aid the true defi- 
nition of value. It is the measure of the resistance which nature 
opposes to our command of the things required for our service. 
Now land under improvement is in proportion less reluctant, and 
in capability richer, or worth more. Principal value, thus pro- 
duced, and rent ai'e equivalents of the labor saved to the purchaser 
and farmer. These qualities of service are the property of the 
improver and of his assigns. They are the right and the reward 
of industry applied in bringing the subject up to its serviceable- 
ness to the degree attained. Enhancement of every good and 



RENT. 53 

valuable thing increases its utility, and therefore, of right, com'- 
mands a higher price, and a higher rent, wages, or fees. 

Carry with you, in all reasonings upon values, the guiding prin- 
ciple : — Nothing can increase in principal or interest, in price or 
hire, but land and labor. These are the raw materials and the 
converting agency of all the physical means of human support, and 
they must rise in value as they grow in usefulness, under the rea- 
sonable law that in commerce we get nothing for nothino;. 

o o o 

jD. Commodities cheapen in price continually under improve- 
ment in production. 

T. Values are uses, not things. Raw material rises in value 
as it is made more useful by labor ; but commodities of every kind 
decline in cost as they are made more readily to decline in re- 
sistance to converting labor and skill. The machine, costs the more 
as it is the more efficient, and its product costs the less as its capa- 
bility enhances. 

It happens, even in our disordered social and commercial affairs, 
that land and labor do enhance continually in exchange value, and 
their products as constantly abound and cheapen in all progressive 
commodities. The normal tendency of the laws to which they are 
subject, in such conformity as we witness, is the endeavor to even- 
tuate themselves in the facts of experience. 

P. Economic rent differs from that exacted by the monopolists 
of land. 

T. As widely as the ten commandments from the morals of 
general society. A philosophy of disorder is simply impossible. 
A theory of the right and the true is a criticism of error and fal- 
sity, as well as a directory of conduct. 

D. The ideal of societary order and organization — the rule of 
righteousness in human affairs — seems to recede more and more in 
the progress of civilization. Prophecy is not history, nor is it 
directory for the conduct of things as they are. 

T. That conclusion is the necessary consequence of the doc- 
trines you have accepted. But is it true ? Is there no advance 
from the savage state to the civilization already reached ? Do not 
the achievements of every decade assure the candid and capable 
observer of the tendency to better still, and better in an indefinite 
progression ? Even the prevailing government of fraud in socie- 



54 POLITICAL ECONOMY. 

tary history is an improvement upon the ohi-time rule of force and 
still greater fraud. Savage morals allow the appropriation of the 
goods of other trihes, but we have something corrective in inter- 
national law. We have a law that says, thou shalt not steal, and 
opinion and civil government do something to enforce it. The brute 
force of barbarism is its one sufficient warranty. Civilization recog- 
nizes the inviolability of the rights of others, even while evading 
its authority, just as hypocrisy pays tribute to integrity, and tends 
and works that far towards conformity. The societary system is 
not growing worse, but better, both in })ractice and in creed. The 
multitude are better clothed, fed, and housed than they were in the 
reign of Henry Vlll. in England. During his reign he hanged 
70,000 of the emancipated British serfs for ottences against proj)- 
erty, and incidentally against life, — crimes which destitution com- 
pelled, — a proportion of the population of the kingdom at the time 
equal to five executions every day in the State of New York now. 
Famine and pestilence were then inevitable and continuous. Educa- 
tion in the elements of literature is rapidly becoming universal with 
us ; but, in the reign of Edward YI. (A. D. 1550), Parliament 
|)assed a law giving the benefit of peerage, equivalent to the benefit 
of clergv, to peers of tiie realm who could not read! — a chanire 
in favor of the present age, significant of a general amelioration of 
the changed conditions and vast improvement in the common life. 
Macaulay, in his History of England, vol. 1, chap. 3d, says that, 
as lately as A. D. 1G85, " bread, such as is now given to the in- 
mates of a British workhouse, was seldom seen even on the table 
of a yeoman or shopkeeper. The great majority of the nation 
lived almost entirely on rye, barley, and oats." There was a time, 
}iot very long since, when a copy of the Bible was chained to the 
church altar for the perusal of tlie parishioners. Now a better copy 
can be had for less than the price of a half day's labor at hod-car- 
rying. Such and an infinite number and value of the changes for 
the better lies between, the now and the then! 

P. The sources of wealth, in general terms, are the gratuitous 
services of nature, made available by the capital and labor em- 
ployed ui^on them. 

T. That is a fair summary; but the knowledge, which is power, 
presses always inwardly and downwardly toward the elements and 



RENT. 55 

basis principles of things. Generalities have excellent uses in 
classification ; as, in the animal world, orders, genera, and species 
are indispensable collocations. The like service is rendered in 
the study of inanimate things ; it bundles and pigeon-holes classes 
and kinds ; keeps them within reach, and in an assortment that 
gives an easy command of them. But it is not enough to have 
general and common notions of things. The word metal does not 
make us acquainted with the differences between gold, iron, steel, 
lead. Science is knowledge pushed to elements and atoms. I 
have already stated what I take to be the contributing forces in 
the growth of wealth ; not with the distinctiveness and exactitude 
of a technical analysis, but with such intrusions or overlappings 
of some of the divisions upon others as are likely to occur in their 
discussion. The method compelled by inquiry into social subjects 
is unavoidably that which Comte calls the ensemble, as opposed to 
the fragmentary, and, let me say, the distracted. Some of the 
factors in the groAvth of wealth, indeed all of them, in ministering 
to a common aim and end, interlock in operation. They should 
be considered respectively and separately, so far as their unity of 
service permits. 

D. The process and the means of the acquisition of wealth 
should be judged and measured by their necessity and use in 
human life. Communist societies, by limiting the requirements, 
escape the disappointments of the people in our loose civilization. 
Supply, however abundant, only meets and satisfies demand. The 
growth of wealth only meets the growth of requirement ; and 
where is the difference in results between much and little, if they 
that gather the little of the manna have no lack, and they that 
gather much have nothing over ? 

T. You mean that such communists as the Shakers and Rapp- 
ites escape the panics and the bankruptcies of trade. They suffer 
no revulsions of business, simply because they have no active part in 
the societary movement. To the extent that they are separated from 
the live world around them, they are mere parasites upon it. The 
crazy world around them must build their railroads, and make 
their markets ; and their content within themselves is only a smoth- 
ering compromise of wants and means. Do they grow in their 
proper human nature under the forced repression of their natural 



56 POLITICAL- ECONOMY. 

endowments, or do they only vegetate ? They do not even repro- 
duce, much less augment themselves. A clod or a stone grows 
only by accretion from without, not by development from within. 
They cannot even be said to be alive to all the purposes of life. 

D. When you say that the race grows richer and richer at 
every advanced stage of productive power, you are only saying 
that they need and consume so much the more. 

T. The royal preacher, who, from the " wisest man," turned 
out the biggest fool in Jewish history, said : " All is vanity and 
vexation of spirit." Like Samson, their strongest man, he ended 
his career of profligacy by covering himself under his own ruins. 
The proverb is handsomely capped by a better and truer one, 
" Every want becomes a pleasure when redressed," and " happi- 
ness is our being's end and aim." This happiness is best defined 
to be the gratification of our active faculties, and, of course, is in 
proportion to their number and activity, — the satisfaction or full 
supply of their demands. This is answer enough to the philosophy 
which limits itself to the boundary of a tub, — a wisdom that 
growls at progress, enjoyment, luxury, in the notion that they 
must end in efteminacy, — a sermon that turns into a song, with the 
refrain, " Man must work, and woman must weep, while the world 
goes round and round," for the doleful ditty has no idea that the 
world ever goes forward. 

D. All useful production ends in consumption. 

T. No, consumption is not the end, for it is reproduction. In 
a very good sense production is as immortal and imperishable as 
the producer. The food which you consume becomes strength of 
physical force and energy of mind. Well-being is measured by 
the consumption of aliments and all the supplies of our needs. 
Wealth does not consist in commodities, but in the service which they 
render. Productions of a people, which they do not themselves 
consume, directly or indirectly, are not wealth in its true ministry. 
Foreign exports, derived and subtracted from their creators, mark 
the condition of JStates " where wealth accumulates and men 
decay." 

D. Of course I did not mean that any kind of power should be 
arrested in its infancy, nor even that " he that increaseth knowl- 
edge incrcaseth sorrow," but only that fulness relates to capacity ; 



RENT. 67 

that limited needs are better supplied than unlimited. My ob- 
structive objections are provoked by your way of treating familiar 
subjects. It is more difficult and a wider range of thought than 
the usual method. It is not so dull, especially when statistics are 
enlivened by indulgence in the romance of natural history, and 
in the narrative of common events. 

T. The romantic in the study of nature is fully matched by the 
marvellous in the achievements of art. Look with eyes as wide 
open as wonder can stretch them, and as sharp-sighted as reflective 
thought can make them, at the achievements in progress and in 
promise among the sources of wealth — the supplies for consump- 
tion — the means of enjoyment — the mastery of nature. Take 
together the wonderful service of labor-saving machinery, and the 
resulting enhancement in the quantity and quali-ty of the commodi- 
ties of use. In some of these things the achievements of indus- 
trial art are marvellous enough to make the fictions of magic com- 
mon in the facts of everyday experience. The magic carpet and 
the wooden horse of The Arabian Nights seem but the prototypes 
of the balloon, and the electric telegraph ; the enchanted apple, 
which cured disease by its perfume, prefigures the infinitesimal 
doses of homoeopathy ; and sub-sepulchral spirit intercourse is 
trying to realize the old-time fairy interventions in human affairs. 
I do not assume the success of these supernatural enterprises ; but 
I sujjgest that, probably, imagination cannot invent anything that 
enterprise Avill not at last realize. We grow by aspiring. 

i>. I am prepared for the annihilation of time and space, and 
of the theories of things governed by earthly conditions. But I 
have heard oratory and read poetry enough to look for something 
newer and more substantial in science. 

T. Perhaps, then, we can find something new enough and actual 
enough in the old to deserve attention in the study of our theme. 

Allow me to advert to the fact that the materials which must be 
made to answer our wants must undergo changes of form and place 
before they are utilized ; and that, in such needed conversion and 
transportation, the forces of nature stand in resistance to the 
powers and purposes of man. Indulge me here if I say that some- 
thing of the sttper-natural must be brought against this natural to 
5 



58 POLITICAL ECONOMY. 

compel obedience ; and we look for something fitting in the instru- 
mentalities we possess for the achievement of our victories. 

Among the " mechanical powers " are the screw, the com- 
pound pulley, and the wheel and axle. Nowhere in nature is 
either of these found. Nature has the lever, the inclined plane, 
gravitation, and that form of it which we call cohesion, but these 
man has as well. 

Now observe that the power of the screw, the compound pulley, 
and the wheel and axle are ultimate facts, measurable in force, 
but absolutely inexplicable in essence. Possibly they are resolv- 
able into the force of the inclined plane, but how mysteriously 
modified and multiplied in efficiency ! There the miracle comes 
in ; there resides the delegated omnipotence and omnipresence of 
the Creator in such degree as answers all our ends. 

Z). The momentum, or force of motion, is well understood to be 
the weight multiplied into the velocity of a body in motion, and 
is capable of mathematical measurement. Where is the mystery 
of the lever power in any of its modifications which you claim to 
be supernatural? 

T. The power of the lever is effective before the velocity begins 
to exist or act, else the lever would not budge the resistant weight. 
How does dift'erence in length of the arms of a lever generate dif- 
ference of power in them ? When a pound weight suspends a 
hundred in motionless stillness, whence comes the momentum ; 
where is the impulse ? We supply insthictively the power be- 
tween cause and eff"ect. Dr. Thomas Brown, of the Edinburgh 
University, refused to use the words, because he could only infer 
efficiency, and he insisted upon using instead antecedence and 
subse([uence, as the whole of what we can know of the phenomenon. 
This is what I have to say of the agency of machinery in pro- 
duction ; I think it is quite as miraculous in the inanimate imple- 
ments as are the vital powers of the soil. These energies are to 
me alike influxes of the creative All-mightiness. 

D. We have heard of sermons in stones, books in the running 
brooks, and good in everything ; but a mimic or miniature omnipo- 
tence in dead machinery transcends the range of the inductive 
philosophy. 

T. As it should, if man is invested with the sovereignty over 



RENT. 59 

his material surroundings which stand in opposition to his domin- 
ion ; if he is really created in the image of his Creator and Gov- 
ernor. I am tempted to quote a rhapsody of Paul de Saint Victor, 
which is not all a fancy — rather a simple truth, glowing with its 
proper fervor : — 

" The imagination of an artist is keenly surprised at witnessing 
creatures of wood and metal imitate human actions with human 
intelligence. They are not living, but who can say that they are 
wholly dead ? Mechanism is a mysterious transition between 
inanimate nature and organic existence. The breath of the soul 
has passed thereby. Pygmalion has conjured them up to breathe 
into them something of life and human characteristics." 

P. How do statistics exhibit the power gained by the employ- 
ment of artificial labor ? 

T. If the hairs of our heads may be numbered, so may the 
works of our hands be estimated. When numerals run up toward 
infinity they become incomprehensible. Professor Rodgers, State 
(ji-eologist for Pennsylvania, represents the dynamic value of fossil 
coal in such figures as these : — 

" One pound of coal consumed in the improved Cornish engine 
gives the mechanic force which one man effects by a day's toil in 
a tread-mill ; and three tons as much power as one man produces 
in twenty years, of three hundred working days each year." 

Assuming that twenty million tons are applied per year to the 
production of mechanical products, it follows that England an- 
nually commands the aid of seven millions of fresh men, having 
the equivalent of their labor-power through a period of twenty 
years. The sum of this auxiliary force represents that of one 
hundred and forty millions of laborers. This for an island num- 
bering but twenty-two millions of people, all told, and of whom 
there are not more than twelve millions of men and women be- 
tween the ages of 15 and 60, is a stupendous productive force. 
It is safe to say that, in the use of coal, modern civilization sup- 
plements its natural labor-power with an auxiliary addition at least 
twelve times its own capabilities. I will not undertake to say how 
. much the dynamic effectiveness thus developed from coal by heat 
is enhanced through the intervention of machinery. 

P. I understood this measurement to be that of the power at a 



60 POLITICAL ECONOMY. 

dead lift against weight or resistance ; and it is probably more 
than matched by the velocity of the motion gained by the mechani- 
cal modifications in application, as in hammers, shutters, rollers, 
and wheels. These, under a speed like that of lightning, seem to 
stand still in a rapidity that defies the detection of sight. 

T. Strength is sometimes combined with, sometimes sacrificed 
to, velocity. We have an example of such a compromise in the 
human arm, where the longest lever is given to the hand against 
the much shorter, in the nearness of the inserted motor muscle 
acting upon the fulcrum at the elbow. In the adjustments of 
forces to uses all forms of mechanism conform to their intention. 
Steam in harness has at once enormous force and a miraculous 
celerity. Yet its prodigies of power and speed employed in our 
service are instances of human command obtained and obtainable 
over masses of matter, and over time and space in the Avork of 
conversion and transportation. Over the elements and atoms 
mind is achieving control still more wonderful. The incantations 
of chemistry set free the latent forces of the material creation 
and rehearse its miracles in its re-creations. It compels the sub- 
ject substances of our dominion to take all forms of use at the 
bidding of the spirit that masters its mysteries ; and, that which 
is most noteworthy in the present age, and most promising for the 
oncoming generations, is the practical application which follows so 
closely upon the heels of scientific discovery. Handicraft keeps 
company with its revelations. Material forces which in the olden 
time were neglected or feared, under the direction of machinery, 
in our day, grow as light-limbed and strong-handed as the thought 
they are intended to execute. Machinery becomes bone and mus- 
cle to the brain of science, and nerves and sinews to practical 
enterprise. Dead matter is made, in all its aptitudes, subject to 
the will of man. 

D. You are making a fairy tale of the history of our common- 
place industries. 

T. Fairy tales were of necessity invented, in the earl}^ age of 
natural knowledge, to supply the felt deficiencies of natural phi- 
losophy. Influences out of the reach and ken of the senses 
required the agency of unseen spiritual ministries to account for 
the phenomena of experience. A hierarchy of angels, in both 



RENT. 61 

the Old and New Testaments, represents this overruling provi- 
dence, and our science is rapidly advancing toward the apprehen- 
sion of spirit power in the wonder-workings of material things. 
Tyndall and Huxley are on the very verge of spiritism ; not of its 
quackeries, but of its scientific demonstration, by the inductive 
method, Avhich is as much compelled to look for adequate causes, 
as the a priori system is ready to supply them. Materialism is 
approaching that higher stage in its advancement at which, to 
divine the system of things, it must admit Divinity as an efficient 
factor. 

D. Oratory in the exposition of purely physical affairs is intru- 
sive and inconclusive. I think that your notion of Political Econ- 
omy pledges you to find the benefits of its study in the welfare 
of the race and of the individual. This expectation is not fulfilled 
merely by showing or imagining what man can do or might do, 
but what through that he shall be and become. 

T. You are right. Man is the object, external things with their 
conditions and relations to him are only tributaries. All that is 
claimed, or need be claimed, for the increase of the apparatus of 
production, is the resulting abundance and availableness of the 
necessaries and the enjoyments of life; and, that through this ever 
growing abundance of supply there is a broadening difiusion of 
benefits and blessings. This describes and measures the increase 
of the general or aggregate wealth of a community: men better 
and better provided with the commodities which sustain their ani- 
mal life ; with the luxuries that refine it ; increasing release from 
drudgery, and with the inducements and opportunities that come 
with these ameliorations for lifting man toward his highest possi- 
bilities and noblest attainments. When we come to treat the sub- 
ject of the wages of labor, we shall be able to show how all these 
blessings tend to descend in larger measure upon the poor, yet, 
as well, to the rich ; for they are not at all partial to any class of 
their beneficiaries ; being providential like the sun, they are made 
" to rise on the evil and on the good, and like the rain, are sent 
upon the just and on the unjust." Matth. v. 45. 

D. It may be admitted that the multiplication in quantity and 
quality of all the products of industry, except of food, is, by an 
allowable hyperbole, unlimited. But food is the staff of life. 



62 POLITICAL ECONOMY. 

Whatever be the possible abundance of other things, a deficiency 
or failure of nutriment is famine, disease, and death to all the 
forms of life, animal and vegetable. 

P. Death in the midst of life and health alone prevents a fatal 
disproportion of subsistence in the world of the inferior animals. 
Why should not the rule and the remedy obtain in the province 
of humanity under the like conditions and with the same design? 

T. Without handicapping your proposition with its startling 
moral consequences, which would make our earthly life, not a 
purgatory of trial and preparation, but a veritable hell of evil and 
disorder, I will try to meet your questionings by the rules of 
inductive reasoning. 

In the first place, brute life and human life are not in tfie same 
category, as your assumed analogy places them. Notice the dif- 
ferences in endowments and manifest destiny. Not many of the 
inferior tribes have a family order, and none of them have hospi- 
tals, or other reliefs for their sick, or make provision for the fail- 
ing strength and the incapacities of old age. The instinct that 
cares for the young is very general ; but benevolence or filial 
devotion are not given to them. When their age of maturity is 
reached they show none of the affections Avhich would relieve the 
sufferings or extend the life of their kindred. Their individual 
and social impulses and relations are fulfilled in the prime of their 
powers. They have no history teaching by example. They die 
intestate. Nothing in them or of them looks to the education or 
prosperity of the generations to follow them. The ultimate issues 
of their existence are in their subservience to the higher forms of 
life that environ them. They are by destiny the provender of 
their contemporaries. Violent, or what we would call premature 
death, is a conp de grace to them. The end of their animal exist- 
ence is the fulfilment of its purpose and use. It is therefore 
illogical to infer from their rate and date of mortality, that it is a 
provision to remedy an excessive fecundity. The allusion in your 
argument is good for nothing if the cause of their premature 
death is found in their constitution and destiny. Perhaps only 
one acorn in a million grows into an oak tree. They are the food 
of other lives as well as germs of their own generation. Can 
you find any analogy between their apparent waste of vitality 



RENT. 63 

and the infant mortality of our kind ? In reasoning by analogy 
like must .be compared with like. It is nugatory as to all the dif- 
ferences. The inferior animals are born into the order of their 
life. This very completeness of endowment and attainment before 
the education of instruction and experience clearly indicates the 
purpose fulfilled, and the incapability of further and better uses. 
Grains and fruits are capable of the propagation of their kind, 
but they ai-e also provided for the sustenance of men and animals. 
Is the destruction of their vitality an accidental failure of pro- 
vision for their maintenance ? Unless man is a beast, the analotji- 
cal argument which you employ is utterly irrelevant. 

I). I can afford to yield the argument from an assumed corre- 
spondence of the subjects adduced ; but, the facts of experience, 
the records of human history, are not impeachable. Men do suffer 
from deficiency of food, and even die of famine, and these pre- 
vailing facts and incidents of human life still remain to be met 
and disposed of. 

T. Your premises do not cover all the facts and forces involved 
in the question under examination. The law regulating population 
must be understood and considered, before we can usefully discuss 
the relation of the numbers of men to the provision of food. I 
must, therefore, postpone your objections until we have inquired 
into the cause of the facts relied upon, if those facts do not explain 
themselves. The normal order of things is not always found in 
simple or surface appearances. The natural sciences are full of 
instances in which superficial observation is contradicted by deeper 
research. 

D. All this is granted, but I still Avait to see how the law of 
population can contradict its manifest operation. 

T. No law contradicts its own operations. We must find the 
harmony and dependency of cause and effect here if we find the 
truth that connects them alike in natural order and in accidental 
disorder. This we shall endeavor in its proper place. 



64 POLITICAL ECONOMY. 

CHAPTER VII. 
COMMERCE AND TRADE— SOURCES OF WEALTH. 

P. It strikes me that Malthus, McCulloch, Ricardo, and Mill 
limited their observations to thickly settled portions of the earth, 
when they drew the broad conclusion of incapacity of the soil to 
support a constantly increasing population. It is clear enough 
that where the area furnishing the required food is small enough, 
their doctrine applies. The people of a village or city without 
other provisions than their little gardens yield, would soon starve. 
It may be answered that these despairing theorists had in contem- 
plation whole islands and even large territories of civilized coun- 
tries, with crowded populations, but does this liberal allowance 
of conditions exclude important auxiliaries which greatly aftect 
their conclusions ? 

T. This thought brings up the contributions to the growth of 
wealth by foreign trade and domestic commerce. For instance : 
take the exports of cotton fabrics from England, which grew at a 
twofold rate in the decade 1850-60, over those of 1840-50. 
These constituted full three-eighths (38.3 per cent.) of the value 
of all her domestic exports in the year 1860; when her iron, 
steel, cutlery, and other manufactures of these metals, of which 
she had at home the raw material and the agents of conversion — 
these metallic exports amounted to only llj^^ per cent., or less 
than one-eighth of the total. Her imports of the raw materials 
used in the manufacture of cottons, silks, and woollens, that year 
(1860) were valued at 47J millions of pounds sterling. Their 
export value reached 75 millions, which gave her a diiference in 
exchange of 27 1 millions (133| million dollars) — nearly 58 per 
cent, of profit, exclusive of the 20 millions of pounds worth con- 
sumed at home. These three textile products from foreign mate- 
rials gave employment to 700,000 laborers, Avhose wages supported 
nearly three millions of her population, and yielded, besides, a 
large profit to her capitalists, amounting, perhaps, to 15 per cent, 
of the export values. Add to these imports the vegetable and 
animal food, and a vast variety of miscellaneous articles of tropic 



COMMERCE AND TRADE — SOURCES OF WEALTH. 65 

and other foreign production which her labor purchases, and it is 
probable that four-fifths of her resources come to her from abroad. 

The United Kingdom has risen from one and a half to six thou- 
sand millions of pounds sterling in capital wealth since the United 
States sent her the first bale of cotton, in A. D. 1790. 

D. Your protective policy in the restriction of foreign trade 
does not allow such a system of exchanges as has built up the 
wealth of Great Britain. 

T. The true system of international trade allows of, and pro- 
vides for, the exchanges of differences that are complementary ; 
while it forbids the evils of domination and dependency. It allows 
for and embraces equitable and mutually advantageous trade for 
the nations conditioned upon a rightful adjustment of the several 
interests; otherwise, the natural rights of the several communities 
of the earth, and the harmony of the whole, are impracticable. 
But these equities of traide are not postponed till the millennium. 
Risihteousness works throuo;h all disorders towards its own con- 
summation, and is as wise and good at every stage of its progress 
as it intends in its' ultimate triumph. A rightly regulated inter- 
national trade during the periods of inequality of industrial skill 
is as profitable to the undeveloped as to the more advanced com- 
munities. It is equally necessary and advantageous to the less 
capable party so long as trade is not allowed to repress its natural 
growth ; just as pupilage is beneficial to childhood duly directed 
to the prospective independence and self-government of maturity. 
The perfect law of liberty, which is also a law of life, authorizes 
and requires the full activity of all the powers possessed, all the 
capabilities attained, which can serve for the onward progress in 
being and doing. 

When in the fulness of time universal harmony of interests 
shall be realized, and, all along, as it approaches, the exchanges 
of diverse climates and unlike industrial capabilities of peoples, 
Avill rightfully serve the good purposes of foreign trade, without 
its existing evils. Cotton, coffee, tea, and spices, which do not 
grow everywhere, must be imported for the use of those who need 
and cannot produce them. The trade in vegetables across climates 
is at once a necessity and a bond of union between the North and 
South. It is complementary and not competitive. It is a policy 



66 POLITICAL ECONOMY. 

of peace and of mutual prosperity. There is nothing in it of a 
war of interests. Protection is defence. It is not aggression or 
monopoly. But, of this more anon. 

D. For the reasons that you allow a free exchange of those 
commodities Avhich do not compete with or displace the labor and 
raw materials of an importing country, you would allow a free 
foreign exchange between the communities where a like necessity 
arises out of different degrees of productive power. 

T. You state the accommodations of the rule something too 
broadly. I limit them to the temporary incapacity of the pioneer 
and earliest stages of societies, where there is neither the capital, 
nor the labor and skill required for self-supply, and where an 
exchange of raw for finished goods is profitable to the less capable 
peoples. A new people, poor and weak-handed, may properly 
give their timber, corn, wool, and their gold and silver ores for 
cloth, glass, tools, and machinery, so long as they cannot make 
them. But free trade, in its commonly intended meaning, is an- 
other thing; and, let me suggest, that it is in itself a misnomer. 
It means free foreign trade, which is a material corrective of its 
true bearing upon the question at issue. 

i>. If I were not so unfortunate as to be told that I am fre- 
quently out of time with my objections, I should have something 
more to say in justification of the principles and policy of free 
trade. 

T. Excuse me for sometimes telling you that you are out of 
place. The conductor of a train must keep on the road, and to 
do this he requires the switch tracks connected with it to be shut 
off. Our baggage is checked for the through trip, and we must 
pass the junctions, leaving them to the way-trains, for which they 
are provided. 

Domestic Commerce as a Source of Wealth. 

D. Profit and accumulation of wealth by a nation, through its 
foreign trade, is easily understood ; but how can domestic ex- 
changes between the individuals of a community increase the com- 
mon stock ? The dealers, buyers, and sellers are a partnership, 
in Avliich one can only gain at the loss of another. The business 
is only a distribution of properties, not an increase of the aggre- 



COMMERCE AND TRADE —SOURCES OF AVEALTH. 67 

gate. Two boys, shut up in a room, cannot make five dollars 
apiece by fifty exchanges of their jackets, shoes, and hats. These 
goods are worth no more at the end than at the beginning of their 
trading. 

T. Huckstering and bartering are not commerce. Its true 
meaning embraces production and service, as well as exchanges. 
It does not consist merely in an alteration of the property-right 
in things which makes no change in their value, but in their crea- 
tion, as well as in the convenience of their distribution for con- 
sumption and service. 

The original sin, in the definition of political economy by the 
authorities which you follow, breaks out into actual transgression 
at every turn of the theory. It sweats out at every pore of its 
hide. Archbishop Whately boldly and baldly makes it, not a 
theory of production and exchange, but what he calls catallac- 
tics, or the science of exchanges ; that is, of products after they 
have come into market. 

D. Facility and accumulation, effected through "the division of 
labor," territorial and individual, according to capability, are 
prime features of the free trade theory. 

T. Yes, that maxim of Adam Smith is followed and abused by 
his professed followers, until it produces all the mischievous effects 
of a falsehood. McCullough, a representative of the school, illus- 
trates the division of labor as a supplier of the subjects of com- 
merce ; but, totally overpassing the commerce of home, he breaks 
at once into rhapsodies in admiration of foreign trade, in which 
everything is cheapened, everything is distributed, everything is 
first carried away from everybody, everything is carried back 
again, and trade grows prodigiously! Thus trade gives competi- 
tion all possible play, for everybody is put to working with and 
against everybody ; whereupon he concludes, with the enthusi- 
astic outburst, " All is mutual, reciprocal, and dependent," Avhich 
is quite as good a description of the mutualities and reciprocities 
of a chain-gang of convicts, or a bench of galley-slaves. But 
political economy is not a system of exchange values in market ; 
it is a theory of the productive power of a people, and it is not 
cosmopolitan in its direct intention, but primarily national in its 
proper province ; and only indirectly, though effectually, subser- 



68 POLITICAL ECONOMY. 

vient to the wide Avorld's advancement in wealth. Mr. Carey 
rightly uses the word commerce for the exchange of services, pro- 
ducts, and ideas by men with their fellow-men, with the least pos- 
sible intervention of other agents ; and he limits the word trade 
to the exchanges made by intermediates for their primaries, the 
producers. 

P. What is the relative money-value of foreign imports to 
home production for consumption in the United States ? 

T. The home production is usually about twelve to one of the 
foreign imports. Moreover, we must not measure the Economic 
value or utility by the market prices of the products of industry 
and the supplies of traffic. In the United States but little raw 
material is imported — little that affords the further profits of con- 
verting skill, or employs labor and capital in reproduction. Nine- 
tenths of the imported merchandise go directly into consumption- 
expense, not accumulation of capital. The foreign wines and 
spirits, the sugar, coflFee, tea, jewelry, and fancy dry-goods, like 
the toys and trinkets, do not take the character of manufacturing 
stock or materials ; and such goods as iron, woollens, and cottons 
are not only expenses in their use, but they also displace the 
home labor which they might employ. I am thinking of the 
wealth-producing price of industry and commerce. 

P. How are the accepted estimates of national Avealth and of 
its growth made, and how far are these estimates reliable? 

T. A damaging uncertainty in these calculations is in the want 
of assuring data. In the matter of foreign tratle, custom-house 
reports approach the truth when quantities are given ; but, when 
only money-valuations are reported, beside the wide fluctuations 
of ])rices, the frauds of undervaluations greatly increase the 
errors of fact ; so that even among the items of official reports, 
there is a tickly-bender support for the footsteps of inquiry. 

P. If the best authenticated statistics are so uncertain, we 
must look elsewhere for the evidences of the accumulation of 
wealth. The general prosperity of the people is a less exact, but 
a better, measure or indication of the chiinges in its condition. 
The fruits of industry and enterprise gamier themselves in the 
acquired provision for consumption — in the actual supply of neces- 
saries and luxuries. 



COMMERCE AND TRADE — SOURCES OP WEALTH. 69 

T. A pretty large acquaintance with, and, I think, a fair judg- 
ment of, statistics, makes me doubt their testimony on the subject 
of national wealth and its rate of growth. Statisticians are all 
afloat in their estimates of domestic production and traffic . The 
European authorities who have, or ought to have, the best means 
of information, make their estimates from the tax registers, such 
as excise charges, incomes paying an assessment, probates of dece- 
dents' estates, insurances, export values, investments in stocks, 
and the like indications of business affairs. On data so incom- 
plete and so inexact as these, the calculations of experts are very 
far apart. General contradiction and confusion result from the 
differences in the methods adopted. 

P. Of the United States, its population, capital invested in 
productive industry, value of its products, value of real property, 
amount of wages paid, the census at every decade gives us the 
official statistics. Is not this a safer guide than the English plan? 

T. Don't be startled if I say I don't think it affords as near a 
report of the actual condition of our affairs. Read the notes 
appended to the census report of our industries for the year 1870, 
by the Superintendent, to find how little faith these official reports 
deserve, and the unavoidable causes of their errors. 

P. If the figures of these reports have so little arithmetical 
value, how are we to form any judgment upon the subjects with 
which they are concerned? 

T. Through years of diligent study I have innocently and can- 
didly looked for the assuring results which the experts in the sta- 
tistics of national wealth seemed to promise, and I have pulled up 
in the conclusion that arithmetical renderings are neither true nor 
necessary to the understanding of the subject. After all our 
investigations of particulars and elements of the great problem, 
wealth in substances, in property and in credit, in possession and 
in prospect, resolves itself into welfare. Means are only Uses, 
and I conclude that the condition of a community is best found in 
its capability of consumption. The dress and demeanor of our 
hirelings, the expenses of the common people, who do not go into 
bankruptcy, expenses in their festivities and enjoyment of leisure, 
the adequacy of wages to supply the necessities and comforts of 
life, the, advancing intelligence and of elementary learning gene- 



70 POLITICAL ECONOMY. 

rally prevailing — in all the forms in which the effects of accumu- 
lation express themselves — are safer data than money measures 
afford for calculation. One can know a change of place and its 
difference from the point of departure by its circumstances and its 
scenery without measuring the distance in miles. Money values 
are not measures of the social situation. The loss and gain in 
the footings of mercantile accounts decide nothing of moment in 
the question of welfare. In that is found the real loss and gain 
of labor and trade. 



Improvement in Travel and Transportation, a source of growing 

Wealth. 

T. The cost of transporting food and merchandise between our 
Western and Eastern States, was in 1870 from a cent and a half 
to two cents per ton per mile. Now (1880) one of the highest 
authorities in railway matters says that five-eighths of a cent for 
the same service is perfectly satisfactory. The effect of this 
reduction in the freight cost is as though the grain fields and pas- 
tures west of the Mississippi River were moved bodily eastward 
to the longitude of Ohio and Western New York. If a quarter 
of a ton of bread and meat will feed a grown man in Massachusetts 
for a year, a single day's labor of the commonest kind will pay for 
the transportation of the year's supply of these provisions from a 
distance of one thousand miles ; or one day's wages places the 
Massachusetts laborer next door to the Western prairies, a thou- 
sand miles away. I am old enough to remember that, in the year 
1820, the freight-cost of mixed merchandise by a road-wagon, car- 
rying about a ton and a half over the mountains of Pennsylvania, 
from Philadelphia to Pittsburg, 315 miles, cost in the spring 
season, when the roads were bad, eleven dollars per hundred 
weight, and required about thirteen days to make the trip. The 
freight at this rate was 3J cents per ton per mile, and the reduc- 
tion of its cost effected in sixty years is more than 82 cents upon 
every hundred cents of the earlier expense. Observe that rates 
of freight vary Avith kinds, an I are further and greatly varied by 
the circumstances and relations of the transporting companies. 
They now range so mucli as from a dollar and a quarter per 100 



COMMERCE AND TRADE — SOURCES OF WEALTH. 71 

pounds down to forty cents. I think it is safe to say the cost of 
the transportation of goods 300 miles across the Allegheny Moun- 
tains has fallen in sixty years from say three cents per ton per 
mile to less than one cent, and the speed of delivery has increased 
more than ten times. A like rapidity of relative rate of travel 
and reduction of expense is not quite reached in the average, but 
they have been excelled in special instances. 

I). How do these changes affect the growth of wealth in the 
community ? 

T. They increase the home value of commodities to the pro- 
ducer, and diminish their cost to the distant consumer ; and, as 
wealth is the power to command the services of nature, the facility 
and the cheapness of sustenance must in proportion increase that 
power of command. The resistance of time and space are ab- 
ridged and overcome, and the degree of the mastery obtained in 
the strucro-le measures the welfare of the victor. When Alexander 
Hamilton, at AlJbany, New York, and John Marshall, at Rich- 
mond, Virginia, w'ere struggling for the establishment of the 
federal Constitution, it took five days with post-horses to carry 
messages between them. It could be done in five minutes now, 
and at a hundred times less expense. I do not insist upon arith- 
metical calculations of the rate or the amount of this progress, for 
numerals are not measures of its value. The highest good of life, 
even where weights and measures of material things are involved, 
is not expressible in dollars and cents. They serve only as meas- 
ures of the substances which are factors in the process. The 
results are to be found in the moral and intellectual forces com- 
bined, which transmute them into a higher use in human welfare, 
as digestion crives life to material aliment. 



72 POLITICAL ECONOMY. 

CHAPTER VIIL 

SUBSTITUTION. 

T. For the purpose of bringing into review one of the most 
fruitful and ever-growing sources of wealth, I have chosen a phrase, 
not very accurate, but sufficiently distinctive to present its agency. 
I mean the power of improving our condition by substituting the 
better and more abundant for the failing supply, or, for the less 
serviceable subjects which we have at command at any time in the 
progress of our attainments. We have briefly noticed the provis- 
ions of this beneficent tendency, in the increase of labor-saving 
machinery ; in the improvement of travel and transportation ; in 
the vast increase in the quality and quantity of manufactures ; in 
the rapidly growing yield of agriculture, both by improved culti- 
vation and extension of territory, waiting for the growing demand 
upon its fruitfulness ; in the aids and facilities of commerce and 
trade in the distribution of commodities, providing for the inequal- 
ities of product that occur in the diverse regions, and capabilities 
of soil and climate ; in the almost miraculous helps of the natural 
sciences and arts in extending the dominion of man over the sub- 
ordinate creation — all these provisions, actual and potential, in 
achievement and in promise. And now we turn to still another 
source of prosperity, entitled to special consideration : 1 mean 
the constantly increasing substitution, for the uses of life, of the 
cheap for the costly, the plentiful for the scarce, the inexhaus- 
tible for the failing, the better for the inferior, which is manifest 
in such facts of experience, among others, as I shall submit in 
proof of our general proposition, that, we are already in advance 
of the savage and all intermediate stages of civilization, and in 
full career toward the better time coming. 

A few of the mile-stones that mark and measure the route of 
progress in human affairs are such as these : "Within a few years 
gas, of mineral origin, with materials in unlimited quantities, has 
been substituted for animal oil in the production of artificial light. 
An equally good and greatly cheaper supply from water has been 



SUBSTITUTION. 73 

secured, and only waits its time for general adoption ; and elec- 
trical light, cheaper and better than either, is looming in the near 
approach of its common use. 

For light and heat, and to meet the immense demand for the 
lubrication of machinery, and of the rolling-stock of railways, 
mineral oils have recently opened up in rivers from the interior 
of the earth, replacing vegetable and animal oils, which require 
so large a surface of soil, and so much labor in their production— 
a beneficence of provision in the matter of heat and light kindred 
to the inexhaustible store of fossil coal that comes to supply the 
relatively scanty and rapidly failing stock of the vegetable mate- 
rial. And still another, and equally great defence against cold, is 
afforded by the increased supply of clothing, and the improvements 
of domestic architecture. These together, ever-more increasing 
m abundance and cheapness, serve also, in a proportionate reduc- 
tion of food, otherwise required to meet the waste of animal heat. 
These accumulating ameliorations result in the extension of the 
average life of a generation from about thirty to forty years 
since the beginning of the present century. I need not say 
how much of comfort, luxury, and leisure for the higher oflices 
of existence they contribute. 

P. A register of the aggregate benefits of such substitution of 
the better for the inferior means of subsistence, in all kinds, is 
grandly manifest in the comparative history of the race from 
savagery up to civilization. 

T. You have in mind some illustrative instances ? 

P. In the history of the Iroquois, or "the Six Nations" of 
American Indians, I was surprised to find that at the time William 
Penn landed on the Delaware, these people, occupying the region 
extending from the Potomac to the chain of the Northern Lakes, 
and from Connecticut to the Alleghany River, did not number 
more than 2500 inhabitants all told. At the present time the 
same area contains and sustains 11 or 12 millions of people in 
comfort and abundance. Here there is no decline in the fertility 
of the land under judicious culture, and no death-dealing dispro- 
portion of sustenance to population. 

T. The contrast is heightened by the fact that under the savage 
management of the soil, aided as it was by the food supplied by 
6 . 



74 POLITICAL ECONOMY. 

the beasts and birds of the wilds, and the fish of the rivers, a 
thousand acres scarcely sufficed for the support of one man. Fam- 
ines and their attendant diseases were of very frequent occurrence. 
These people were capable of a political organization, in essentials 
the prototype of our State and Federal governments. Their " Long 
Lodge " was a representative congress of its leading people, diifer- 
ing from ours mainly in this, that it gave a separate deliberative 
chamber for their women in joint council. Yet, with so high a 
grade of attainment in the policy of commonwealth affairs, they 
had so little government of the industries necessary to the growth 
and preservation of a people. 

I think w^e have a clearer and stronger illustration in the 
authentic history of tlie Israelites, from the time of Abraham to 
that of Joseph. These people, through whom we have the law and 
the prophets, on which Christianity rests, were often compelled to 
draw their supplies from Egypt, which had a vastly better system 
of industrial production. The progeny of Jacob sold their inheri- 
tance, as Esau sold his, for a mess of pottage. A people that does 
not acquire and hold the mastery of their native land must go into 
slavery under those that do. In modern times they become a sort 
of serfs on their own soil. Their masters are in the foreign 
market, which fixes the price of both what they have to sell and 
what they must buy. A slave is one who is the subject of a power 
outside of himself. Independence is not a national flag or a docu- 
ment ; it is a condition of life. It consists of current events of 
experience, not in written constitutions. The man that pays out 
all he earns to his employer lives in a rented house, and must 
travel up and down other people's stairs in the dwelling that he 
calls his home. Tenancy for a term of years, or for life, is not a 
fee simple or allodial estate. This is not economic independence. 

P. A natural history of the process of substitution in the means 
of subsistence, even limited to an outliiie drawing, would interest 
and instruct one so new to the subject as I am. 

T. Forest fruits in their seasons, and animal food from the 
forests, rivers, and air, are first drawn upon for food supplies. These, 
beside depending largely upon climatic influences, are secured at 
a continually increasing toil and vigilance, with a resulting de. 
crease of yield. In this state of things the " dismal science " 



SUBSTITUTION. 75 

apostles may find abundant proof of their theory. War, pestilence, 
and famine go even beyond their assigned remedial necessity in 
the restriction of population. 

At a stage considerably advanced above the savage, animal food 
begins to be supplanted and reduced in temperate climates, and 
almost displaced in the tropics and semi-tropics, with gains pro- 
portionate to the substitutions so effected. 

Exclusive animal food, where pasturage and prepared provender 
must be used, requires ten or twelve acres of land to grow the 
flesh-diet of one man for one year's consumption. One acre of 
wheat will support three persons, affording thirty-six times as 
much sustenance. One acre of potatoes yields the food of nine 
persons, equal to one hundred and eight times the nutriment pro- 
duced from the breadth of land required to raise the equivalent of 
flesh-meat. In such ratios advanced and diversified agriculture 
multiplies the means of subsistence by the process of substitution 
of the abundant for the scarce ; and in like degree, though varied 
in proportion, by all mixtures of these constituents of diet. 

In the inferior animals we have a clear demonstration of the 
economy of a vegetable diet. The lion, tiger, bear, and other car- 
nivorous beasts and birds, multiply slowly ; while the vegetable 
feeders — the horse, domestic ox, and buffalo — increase their num- 
bers immensely. These go in herds, while the ravagers of the 
living creatures around them roam almost alone in the solitudes 
which .they make. The like observation applies to the butchers 
and the vegetarians among birds. 

In apparel, as necessary to life as food itself, and among ad- 
vanced communities, perhaps equally expensive, the vegetable flax 
and cotton supplant aH^ast amount of animal wool and silk. One 
acre of ground will produce as much of use in textile fabrics and 
furniture as a hundred will yield in sheep's wool. Of course I do 
not mean that any one of these substances should totally exclude 
its correspondent of a different origin ; but that the substitution in 
some cases, and a mixture in others, prodigiously increases the 
total stock, adapts it to diverse uses, and brings them all more 
easily within the means of purchase. 

P. So far as the mineral kingdom can be a resort from the 
animal and vegetable, the acts of substitution must extend the 
benefits of a graded progress, with a cumulative force of product. 



76 POLITICAL ECONOMY. 

T. The course of this process has a curious analogy to the 
inclined plane on a road-way. It begins or takes its first step by 
passing from the fruits that grow above the earth and the beasts 
that roam over it, to cereals that grow from it, and the roots that 
have their place and nutriment in its bosom. The next advance 
step is into the bowels of the planet, in which we find stores of 
wealth-giving materials absolutely inexhaustible ; the respective 
supplies swelling from the transient and deficient, through the 
abundant and ever-renewing, till they reach the rank of the per- 
petual and the superabundant. 

D. The depth of this series makes one dizzy, as in trying to 
measure the unfathomable ; but tell us, if you can, how such 
latent potency in the materials of support affects, or can affect, 
the masses of men in civilized society. Something, much has been 
gained, but all along the needed, has been much more than was 
ever realized. However ample the store accumulated and in 
reserve may be, it is only the realized that counts in actual wel- 
fare. 

T. To ansAver your question, how the unquestionable augmenta- 
tion, already eflected and assured in prospect, works for the benefit 
of those who have no capital but their labor-power, it is safe for 
the present to suggest that growing abundance must cheapen its 
subjects in the marts of exchange to all consumers ; else what is 
the meaning of the maxim, "supply and demand," in the philoso- 
phy of your favorite authorities ? 

D. Cheapness is a relative term. It has reference to the state 
of the purchaser's fund, as well as to the nominal prices of the 
market. 

T. That question involves the distribution of the products of 
industry among the several contributors concerned. This will be 
best considered when we come to the investigation of the history 
and the law of Wages, Profits, and Interest. 

It occurs to me now that the operation of the law of substitution 
would be best exhibited by arranging the subject matters in the 
juxtapositions of a tabular statement where the eye would help 
the ear in apprehending it. 

P. I have employed my leisure in an effort to arrange the cor- 
respondent substances, in advanced uses — the things supplanted 




SUBSTITUTION. 



77 



bj improved uses of other things, increased in quantity and in 
cheapness throughout the process of what you call Substitution. 
I have arranged them in three phases of movement. First, from 
the animal to the vegetable kingdom. Second, from the animal 
and vegetable kingdoms to the mineral. And I have ventured to 
add a third transition from the animal, through the vegetable and 
mineral, to that territory of effective forces made tributary to the 
world's Avoi-k which scientists call the Imponderables. 

I submit the list for such consideration and criticism as it invites, 
premising that I am aware of its defects both in subjects and 
arrangement. 



1st. From the Ayiimal to the Vegetable Kingdom. 



From animal food as a chief supply. 

" skins, wool and silk in clothing. 

" skins in sails and cordage. 

" leather. 

" beasts and human porters. 

" parchment. 

" animal oils. 



To vegetable food more and more 

largely mixed. 
" flax and cotton textiles. 
" hemp and jute in cloth and ropes. 
" caoutchouc and gutta percha. 
" the wooden canoe. 
" paper of rags and vegetable fibre. 
" vegetable oils. 



2c?. From the Animal and Vegetable to the Mineral Kingdom. 

To coal, gas, and mineral oil. 

" slate, brick, stone, iron, zinc, cop- 
per, tin. 

" steel and gold pens, and metallic 
types. 

" steel gravers, metallic plates in 
photography. 

" transparent glass. 

" steel springs. 

" iron locomotive engines. 

" metallic gun and shot. 

" lime, marl, gypsum. 

" mineral gas. 

" ii'on vehicles. 

" metallic machinery. 

" heat of coal and expansibility of 
steam. 



From wood and peat. 

" wood in houses, ships, bridges. 

" goose quills. 

" bristles in drawing. 

" translucent skins. 

" feathers and hair. 

" horse, ox, camel. 

" wooden bow and animal string. 

" animal and vegetable manure. 

" animal oil and wax. 

" wooden carriages. 

" bone and muscle in labor. 

" animal power. 



78 POLITICAL ECONOMY. 

3(i. From Animals, Vegetables, and Minerals to the 
Imjjonderahles . 

Electricity substituted for Living messengers and vegetable 

sails. 

Galvanic heat " " Vegetable and mineral heat. 

Electric light " " That from all tangible substances. 

Telephone and telegraph " " All other mediums in conveying in- 

telligence. 

FROM INFERIOR TO BETTER OF THE SAME KIND. 

T. In this last class you have mixed actual achievements with 
possibilities, Avhich advancement of knowledge and power will turn 
to certainties of experience ; and you leave partially unnoted, while 
travelling from one kind of substance to another employed in the 
same use, the constantly advancing substitution of the better for 
the inferior in the same kind of things. For instance, paper made 
into bricks, boats, and bags that resist fluids like glass. But the 
transformations, like the transitions of all substances in modern 
art, are almost infinite. 

I think that the testing of propositions by diagrams, where 
that is possible, — by tabular statements arraying the contrasts and 
correspondences so as to see the relations of the elements con- 
cerned, is sure to unload the student of his prejudices and assump- 
tions, and to stretch him to his proper work of knowing truly and 
thoroughly what he thinks vaguely or has learned trustingly and 
inexactly. 

P. Do you detect any exceptionable things in my tabular 
statement ? 

T. There are probably plenty of them ; some of which you 
will find for yourself every time you revise it. Lord Bacon 
promised a diagram of the order of the sciences, progressive and 
successive — a sort of table of their substitutions and superven- 
tions, but he failed — at least his editors have found nothing yet, 
either in his publications or manuscripts. So, cheer up, for you 
also are mortal. Looking out for mistakes in your happiest 
works, you may correct as you discover them. Since your in- 
fancy the accretions of growth have displaced the effete atoms of 
your physical frame ; yet you have grown several inches through 



SUBSTITUTION. 79 

the changes and substitutions, and have preserved your identity 
and secured a good balance in the account of loss and gain. 

I observe that you have not assigned water-gas to either of the 
kingdoms of natural objects. Naturalists have not found the ter- 
ritorial meets and bounds of the watery world. It exists every- 
where, but. resides nowhere. There is as much of it in the sky at 
all times as in all the rivers of the earth ; it permeates all things 
that have anything of life in them. Chemistry decomposes it, and 
recombines its elementary gases; but, in the geography of the 
sciences it has no determinate location ; like the aeriform and 
electric fluids, it is boundless. It is somewhat over-bold to call 
it a kingdom within our dominions; because we cannot yet 
answer the questions : " Hast thou entered into the treasures of 
the snow ? or hast thou seen the treasures of the hail? Hath the 
rain a father or who hath begotten the drops of dew ? Hast 
thou entered into the springs of the sea? Canst thou say to it, 
hitherto shalt thou come, but no further: and here shall thy proud 
waves be stayed ? " (Job xxxviii.) 

D. I am not sure that ignorance is bliss, though I enjoy a good 
deal of it. I am consoled when I hear my superiors acknowledge 
their deficiencies in the knowledge that is power. Moreover, 
Solomon says " he that increaseth knowledge increaseth sorrow." 

T. That proverb was uttered by one who had a great deal too 
much experience in the worst ways of life. The wisdom of the 
creative Word is efficient for the control of the world. In the 
degree that it is attained, it brings its proportion of omnipotence 
with it. Reverence is due to the knowledge of nature. There 
is providential beneficence in its extension and diffusion. It is 
a reform force that levels upward. Its design is the adjustment 
of material conditions to social interests universally. If water- 
gas becomes available for heating purposes in the regions that 
have no coal, it will be a world-deliverer from industrial domina- 
tion. The prophecy of growth in the useful arts, means the 
emancipation and enfranchisement of all men in the order of their 
capability and development. 



80 POLITICAL ECONOMY. 

CHAPTER IX. 
POPULATION. 

T. The distribution of wealth would fitly follow the examina- 
tion we have given to the laws and the process of its accumula- 
tion ; but a preliminary inquiry is involved in the question of 
sustenance adjusted to numbers — the law of population in its 
relation to supplies. 

B. So far as the increase of population is concerned, is it not 
enough to know the natural, which is the possible of requirement? 
Harmony between the possibilities of food-supply and the possi- 
bilities of the demand for it must be the search, if conducted 
according to the conditions of the problem. 

T. So the Malthusian school presents it, and they Avould be 
right if they had the truth of the factors ; Avhich they have not. 

B. Then we are to have a dispute about the basis facts of the 
doctrine. 

T. No, that school does not trouble itself Avith the facts. The 
difference is all about inferences from assumptions, as the debate 
is usually conducted. But let us begin with the facts: 

Malthus and his followers assumed the rate of propagation, under 
natural law, to be a fixed quantity or measure of increase. This 
we deny in toto, with all its consequences. First, let us look 
at the surface facts as they present themselves, leaving disturbing 
causes for after examination. 

In the sixty years next preceding the year 1860, the popula- 
tion of the United States increased very nearly three per cent, 
compounded per annum, or, at the rate of doubling once in every 
23| years. The native white people, after deducting the immi- 
grants, may be put at 2| per cent., nearly, per annum, at which 
they would double in every period of 27 years. Great Britain 
(Ireland excluded) doubled its number once in the last fifty years, 
but, allowing for emigration, the period would be reduced to 46 
years, or, 1| per cent, compounded per annum. Prussia in- 
creased at • very nearly the same rate — 1| per cent.; while 
France, but little affected by either emigration or immigration, 



POPULATION. 81 

has been adding to her population in the same period, no more 
than 1 of one per cent, per annum, requiring 277 years to double 
her numbers. 

These instances are enough to exhibit the greatly varied rates 
of increase of people born and living in their respective countries, 
who are near enough alike to be classed together for comparison 
and for criticism of the assumed rule. Men differing from each 
other constitutionally and in local circumstances no more than the 
German and Celtic stocks in Europe, and their mixed descendants 
in America, are thus found actually to differ in rate of natural 
increase as much as 27, 46, and 277 differ from each other. Ob- 
serve that we are now taking into the comparison only the most 
favorably conditioned nationalities ; throwing out of the account 
the Irish and the Italians from the British and Celtic families. 

It must be noticed, also, that these figures express the present 
current movement in the countries named. This is very far from 
the fixed general rate of doubling every quarter of a century pro- 
posed by Malthus as the natural law and result of the procreative 
function, and just as far from establishing a constant quantity, 
possible or actual. These are striking examples of a departure 
from the rule of indvictive reasoning founded upon the facts of 
observation and experiment ; and, at the same time, an instance 
of deduction based upon assumptions. J. S. Mill was right in 
declaring that his school of Political Economy " reasons, and can 
only reason from assumptions, not from facts." 

Neither have the rates of mortality any greater constancy or 
universality. The death-rate varied in London in the period of 160 
years (1685 to 1845) from one in twenty-three of the inhabitants, 
at the former date, to one in forty at the latter. " The ordinary 
mortality," says Macaulay, " in the 17th century was as great as 
a visitation of the cholera would make it in the 19th." Thus the 
main element — the very foundation of the Malthusian theory of 
population — is so greatly affected and disproved by difference in 
rates of increase in different places, circumstances, and dates. 
One of these circumstances is particularly unfortunate for the over- 
population theory— the population of London, when its death-rate 
was at the highest, was not more than one-twelfth of the number 



82 POLITICAL ECONOMY. 

that the city contained when their mortality was reduced to one- 
half the proportion of the earlier date. 

D. You are not giving due weight or any weight at all to the 
great change in the sanitary, police, and charitable interferences 
that have come into use in the period mentioned. 

T. I am presenting the facts which the ^lalthusians are bound 
to explain. Their constant quantity of births, as measured by the 
survivals, goes to pieces under the shock of statistics. Births are 
not everywhere registered, and nowhere accurately. The numbers 
of the living and of the deaths are much more correctly noted. 
The deaths in England, in the United States, and in France, vary 
not more than one or two in ratio to their total populations, while 
the rates of increase among the living differ immensely. England 
loses annually a number represented by 46 of its people, the United 
States by 45, and France by 44 ; while their respective rates of 
growth are as 46, 27, and 277 are to each other. Now how are 
the survivals accounted for by a uniform ratio of births ? 

D. I do not know the certainty of these facts. 

T. Neither do I depend upon their arithmetical accuracy. They 
are carefully collected and registered, and are approximations near 
enough for the data of the inquiry. I leave them to engage the 
enemy's front, while I turn, by a flank movement, to attack them 
on their indefensible rear. 

D. Do you mean to leave the array of fact for a better ground 
of assault ? 

T. Not exactly ; I leave the adversaries to their conflict with 
the facts, and resort to a method of discussion which rests upon 
principles, Avhich facts must follow and fiilfil in the orderly pro- 
cedure of natural phenomena. Neither the possible productiveness 
of the land, the water, and the air, nor the future rate of increase 
in the numbers of men, are, or can be, now ascertained. They are 
not within the range of arithmetical estimates ; and the problems 
concerning them rest, not upon numerals, but upon principles. 

D. If these principles are not found or revealed by the facts of 
observation or experiment, where are they to be sought for ? 

T. They belong to the province of final causes — the manifest 
design of the system of things of Avhich the subjects are a part. 



POPULATION. 83 

I). Does not all of natural science fall within the jurisdiction of 
the inductive system for data and doctrine ? 

T. The inductive system itself is compelled to assume that the 
means are provided in the constitution of things for the accomplish- 
ment of the ends clearly indicated. 

I). A proposition so sweeping as this asks for proof. 

T. The Baconian, or inductive philosophy cannot advance a 
single step in discovery without postulating the law that the 
prophesy of an end, in all the realms of nature, is a pledge and 
proof of provided means. There is no other basis for the science 
of existing substances and forces. For examples : — An orbit with 
an apparatus of vision in a fossil skull proves a contemporary pro- 
vision of light ; a skeleton chest found imbedded in a rock indicates 
the coexistence of respirable air; the structure of a tooth teaches 
with absolute certainty the existence of a suitable kind of food at 
the time of its development. Design thus interprets and reports 
the conditions of things in the pre-historic ages. If this guide to 
the knowledge of nature is rejected, inquiry is nonplussed, and its 
study is brought to a stand-still ; the history of the past is not 
traceable in its vestiges ; and, outlook for the future has no di- 
rection and no results. So science, " the science of observation, 
experiment, and induction thence" builds its certainties as much 
upon the harmonies of the system of creation, and as confidently 
as upon the evidence of the senses concerning presently transpir- 
ing events. Thus far the matter-of-fact philosophy protrudes itself 
into the deductive. It gets to be the a posteriori by following the 
a priori through the whole length and breadth of its unquestion- 
able teachings. Inquiry in the system of physical things, directed 
by the senses, in every last analysis runs aground upon ultimate 
facts, beyond which inductive reasoning cannot go. Its founda- 
tion is in its ignorances, and its philosophy is a science of appear- 
ances. 

D. Considering the triumphs that the a posteriori method has 
won in the world of physics, you limit its province and its capabili- 
ties surprisingly. 

T. 'No; 1 leave to the philosophy of materialism all its proper 
liberty and legitimate authority — the whole range of natural 
phenomena that the visible creation offers to observation ; but the 



84 POLITICAL ECONOMY. 

central and supreme truths of things lie quite out of the reach of 
observation and experiment. The senses cannot compass them. 
They do not centre amid " the things that do appear." Their 
lines of induction focalize in the absolute, — the designs of the 
Creator. Design, otherwise, final causes, connects the end with 
the beginning, and therein alone is to be found the efficiency and 
dependency of cause and effect. All the potency which we ascribe 
to material things is an influx of apportioned omnipotence. 

P. I understand you to mean that the inductive system, ex- 
cluding; anv other data in its service than those which the senses 
discern, is not the sole rule of investigation or directory in judg- 
ment. You do not believe, with Aristotle, that " there is nothing 
in the intellect which was not previously in the senses ;" or, with 
Locke, that " all ideas of reflection are formed from ideas of sen- 
sation." 

T. No ; we have ideas and ideals, that come not from observa- 
tion or experience. Our intellectual and moral faculties are 
equipped with innate activities that have no patterns in the per- 
ceptions of outside things, or in any possible modifications of 
them. The mind and feelings have instincts, just as our bodies 
have. Our intuitions and inspirations are not born of our experi- 
ence. 

The inductive system abused — pushed beyond the boundary as- 
signed to it by Bacon, and forced into a province of knowledge of 
which it is wholly incapable, has made wretched failures in ethics, 
politics, jurisprudence, education, psychology, theology — in what- 
ever is in its nature metaphysical or supra-physical. 

D. Is the law of cause and effect an insufficient directory in 
the explorations of natural philosophy ? 

T. Reflect, You are speaking of the connection subsisting 
between second causes, in exclusion of the primum mobile, or first 
cause, in which alone power abides. 

P. I cannot anticipate the application of your method of in- 
quiry in the region of mixed material and vital phenomena to the 
question in hand. 

T. It authorizes the logical basis of design in the creation as a 
starting point for discussion, which, as it concerns our present sub- 



POPULATION. 85 

ject, may be embodied in this proposition : The power of repro- 
ducing life is in inverse proportion to the potver of maintaining it. 
In evidence : The insects of a day are produced in myriads. 
The animals, whose span of life is reduced to half a dozen years, 
are limited to hundreds of offspring. The higher grades, that live 
a score or more years, are in proportion less prolific. Birds and 
beasts that outlive our threescore and ten, add their evidence to 
the rule and its examples of a proportionately diminished fertility 
in the reproduction of their kind. This is the law as it obtains 
among various species of animated creatures. It provides for the 
continuance of races, and for the casualties to Avhich they are 
respectively subject. So we find the law of their existence in its 
Design. I suppose that no one imagined that such abridgment of 
their terms of life has been interposed to correct a natural fecun- 
dity beyond the provision made for their subsistence ! Absolute 
Atheism could not logically go so far. Even if creation was evolved 
by the innate forces of matter, its functions must conform to its 
necessities, else it would run into the confusion of chaos ; order 
would be impossible ; it could not take the form and movement of 
system, and could not be the subject of science. 

D. You have said that the inferior classes of animals are born 
into the order of their lives, and are deprived of liberty, except in 
the degree required for accommodation to the exigencies of their 
existence and uses ; and you have refused to admit analogies 
between subjects unlike in their nature and offices. 

T. Very true ; but in this case I have not pressed the argu- 
ment beyond the intrinsic evidence. A general law rules among 
and over subordinate variations. Scientific classification admits 
species and genera. Their definitions being strictly regarded, 
reasoning upon them is just and safe. 

D. But our problem is the application of your proposition to 
the life tenure of the human race through all its accidents. 

T. Well, let us see whether we can carry the law in its mani- 
fest operation into the history of human life : — 

In the savage, or barbarous stages of society, and in the earlier 
stages of what Ave call civilization — in all periods of disorder, past 
and present — ^the mortality of the race in early life is fearfully 
large. The bills of mortality report for our principal cities the 



86 POLITICAL ECONOMY. 

one-third of the deaths as occurring under the age of twenty years, 
and the newspapers record crimes against life and property, sum- 
maries of pauperism, instances of destitution, asylums for the sick, 
the blind, the insane, that seem to overtask the most active reme- 
dial benevolence, and to demonstrate a terrible deficiency of pro- 
vision among the unfortunates of the masses. From such stagnant 
puddles, as these it is easy to fish up facts, by the theorists of dis- 
proportion, to countenance their speculations. But these facts, so 
far as they show their meaning, prove our proposition, — the pro- 
duction of life is always in an inverse proportion to the provision 
for its maintenance. It holds its purpose through disorder, and 
endeavors to inaugurate its normal harmony. The whole of natu- 
ral history demonstrates the rule that, where mortality is largest, 
fecundity is greatest. It is a shield like that of the fable, that has 
two sides for opposing knights to fight about, and the matter of 
debate is simply this, — is the provision of food defective, or is the 
existing rate of increase of population an abuse capable of correc- 
tion, and tending to a harmony of demand and supply ? The facts 
to be considered are broadly contrasted in the excessive fertility 
of the drudges of Europe and of the slaves of America on the one 
side, and the less fertility of the highest grade of society every- 
where on the other. 

P. At the Scott centenary celebration Lord Houghton said of 
the world's litterateurs, that they seldom leave descendants. Eng- 
land has no Shakspeare, no Milton, no Bacon, no Newton, no 
Pope, no Byron ; Italy has no Dante, no Petrarch, no Alfieri, no 
Ariosto; Germany has no Goethe, no Schiller, no Heine; F^'ance 
has no Montaigne, no Voltaire, no Descartes. Of the men and 
women of great intellectual activity Avho have left no descendants 
the list is long enough to establish the rule. The whole number 
of names on the roll of the Peers of Great Britain and Ireland in 
A. D, 1878 was 473, more than two-thirds of whose titles were 
created in the present century. There are now extant of the 
peerages of the IGth century, only 12; of the 17th, 35; of the 
18th, 95; no more than three date from the latter part of the 
13th century. 

D. There are exceptions to all rules. 

T. There are no exceptions to true rules. Especially there 



I 



POPULATION. 87' 

are none to the rules which are the laws of nature. Exceptions 
contradict and disprove rules. What they do prove is the falsity 
of the rules that admit them. 

But I have something to propose now, that meets the question 
directly, after the manner and under the requirements of the mat- 
ter-of-fact philosophy : It is found in the established laws of the 
human organism. The evidences of our doctrine fall into three 
propositions familiar to ordinary experience : 

1st. The nervous apparatus of the various species of creatures, 
and of the various individuals of each species, vary with their 
respective capabilities of maintaining life — largest as they are 
longer-lived and more highly endowed. 

2d. Fecundity is given in inverse proportion to the development 
of the nervous system — the largest least and the smallest most 
prolific. This observation holds from insects up to elephants, and 
in measure all the way up the ascent from the lowest to the high- 
est grade of intelligence of kinds and individuals. 

3d. Unequal and partial distribution of the total vital force 
among the organs and functions of the frame, maintained perma- 
nently, must be at the expense of those that are thrown out of 
use. 

i>. I am not sufficiently skilled in physiology to put these posi- 
tions to the question. 

T. Instances familiar to common observation will answer for 
proof. A good class-book upon comparative physiology will 
establish my first proposition ; but I need not insist upon either 
this first, or even upon the second that I have given, for the sake 
of symmetry and completeness in the chain of evidences. The 
truth of the last fully covers the preceding two. This third 
proposition needs no other proof than its clear statement. If the 
sum total of the vital powers has any limit, the concentration of 
the individual's energy upon one, or one set of organs, must be 
effected by a diversion of activity from others. We see this in 
fevers where the excitement of the nervous and circulating sys- 
tems is inordinately great, and the muscular and digestive func- 
tions are proportionately diminished or suspended. The same 
thing is true of every morbid state involving the frame more or 
less generally. Disease has been well described as a broken bal- 



^8 POLITICAL ECONOMY. 

ance of excitement. But, directly to our purpose, inequality in 
the distribution of vital power is almost constantly exhibited in 
conditions quite compatible with general health. It occurs in all 
instances of intense occupation. We do not always look and per- 
ceive when we see ; nor listen and perceive what we hear. In- 
tense attention to one thing forces inattention to others. In cases 
of permanent concentration, wliere the fixity amounts to a habit, 
excluded offices of the body and of the mind, dependent upon the 
organs which it employs, fall into incapacity by continued disuse. 

The first deduction to be drawn from facts so obvious as these, 
is that no fixed and invariable quantity of action or of results can 
be predicated of any one or other of the distinct organic struc- 
tures in the living body ; much less can the highest possibility of 
any one be taken as the common or average measure of ability 
in all times, places, and circumstances, as the constant quantity of 
the jNIalthusians unwarrantably assumes. 

D. I see the drift of the limitation of vital force in individuals, 
and of the unequal distribution of action among the animal func- 
tions. The theory is so new in application to the subject under 
consideration, that I would like to have it further developed. 

T. The trial of the doctrine tested by facts must be very 
briefly given : 

That there is no uniformity, no constancy of results in the 
growth of population in the races, classes, and individuals of 
society, is appai*ent to observation, and proved in history. The 
whole range of the phenomena indicates a constitutional antago- 
nism of action between the generative and nervous forces, with 
very great modifications of effect. For example : There is little 
antagonism between muscular and brain power Avhere the latter is 
comparatively inactive, as in the drudges of the unskilled indus- 
tries. The higher human endowments, the moral and intellectual 
faculties, directly employing the brain and the external senses 
in great activity, seem to be the special antagonists of the pro- 
creative function. 

D. You are getting upon delicate ground; but I am glad to 
have you upon terra fir ma. 

T. Truth and use are the only clothing that innocence needs. 
Swedenborg happily illustrates the influence of recejitivity. 



POPULATION. 89 

Travelling in the spirit-world one day, he asked his angel 
guide to pluck for him a bunch of figs. When he tasted them 
he complained that he had got grapes instead. The angel replied, 
"I gave you figs, but you took grapes." Upon a perverting pal- 
ate sweetness turns sour. 

To pursue the facts and learn their meaning — it is to be noted 
that where the animal prevails over the intellectual and the moral, 
and in proportionate degree, fecundity increases; teaching, that 
the remedy for excess of population is not in this or that kind 
of food, in its abundance or scarcity, but in the duly balanced 
activity of the perceptive, the intellectual, and the moral functions 
of the brain and nerves. Such cultivation and employment of all 
the powers of body and mind as will secure their equilibrium will 
correct disproportion either of defect or excess in any of them. 
Evils resulting from conduct are abuses, and nothing else. Obe- 
dience to law is their prevention, infinitely better than curative 
treatment, which, by the way, is generally mere quackery. 

P. The law of balance and counter-balance governing the ner- 
vous functions must have application as wide and varied as the 
manifestations of the vital powers. 

T. It rules in the philosophy of history and contemporary 
observation, and it has an outlook of prophecy in it. 

D. There are points in the history of the North American 
Indians that puzzle me, if I must accept your explanation of tLe 
brutal fecundity of slaves and other industrial drudges. These 
Indians are ignorant and indolent, enough to make them slaves of 
the lowest forms of animal indulgence, and besides, are under very 
slight moral restraints. 

T. You have not finished their description. These Indians are 
hunters, followers of Diana, the goddess of the chase and of chas- 
tity — a significant combination. They are as broadly distin- 
guished from the lowest class of civilizees in habits and occupation 
as in fecundity. They have a fiery, nervous temperament, they 
are, withal, stoics in endurance, indomitable, fanatical, abso- 
lute in will-power. Their fastings are as fearful as their feastings ; 
they go from ungoverned indulgence to the extreme of abstinence ; 
they are wilful, proud, arrogant, brave, revengeful ; they are the 
chivalry in rough; they are the men who do die in the last ditch; 
7 




90 POLITICAL ECONOMY. 

desperate in assault, cunning in defence, alive to their point of 
honor, and never unreflective, hoAvever devilish in hattle or ruth- 
less in victory. They are, besides, eloquent though illiterate, and 
are in brain-power incomparably beyond the ignorant of other 
races. In their character there is nothing infantile ; it is mon- 
uraental of past greatness in decay. All this indicates cerebral 
and nerve force that removes them Avorld-Avide from the unthinking 
and unreflecting hordes of men under the yoke of civil domina- 
tion and social degradation. Slave implies privation and depra- 
vation; savage, applied to this race, means the wild liberty of 
unshackled impulse. 

The hunter life demands vigilance, alertness, sharpness of 
attention, of perception and reflection, which draw largely upon 
the nerves of the senses, and the coordinating agency of the 
brain. Perpetual inter-tribal warfare and individual duelling is 
another heavy drain upon the nervous system. Their whole life, 
in its practical bearings, with the unattractive condition and char- 
acter of the subordinate sex, is extremely unfavorable to the 
intersexual affections. So understood, they are not an exception, 
but a striking example of the counterpoise of the passions. 

D. T would not be captious ; but I cannot help suggesting that 
there are a vast number of cases which do not seem to confoi'ra to 
your doctrine. 

T. I think there is proof enough to establish it, if the appa- 
rently refractory instances were disposed of. To these seeming 
exceptions, for want of understanding them, I can only reply that 
the physical and mental conditions of parentage are but seldom 
known, indeed, are scarcely discoverable. Medical science is 
very far from fathoming .the mysteries of procreation. To know 
them thoroughly would be to put them within the power, and sub- 
ject to the caprices that would lead to terrible abuses. The Mas- 
ter of Life has not delegated such vice-regal authority here as he 
has over dead matter and its issues. It would not be wise or 
prudent in Providence to put into our hands an absolute govern- 
ment of life, death, and immortality. We can know enough of 
their springs of action for our necessary use. We must stop 
there. 

D. So, we must leave proofs and exceptions to make their own 
compromises, on the ground, I suppose, that believers are not 



POPULATION. 91 

bound to explain away, or to surrender to, apparent incompatibilities 
Avhich neither they nor anybody else understand. You have still 
sonaething further to urge, perhaps, as usual, how the faith in a 
social principle works upon the hope and the charity of human 
fortunes. 

T. The prospective operation of this principle or law of counter- 
poise in functional inter-action of the nervous powers is an attractive 
claim vipon our belief in it. Its promised issue in the amelioration 
of the fortunes of men is not too good to be true ; it is too good 
to be untrue. Moreover, it offers an exploring and explanatory 
lischt into the existing; disorders and their remedies. How is the 
disturbed balance between demand and sujDply to be restored ? A 
satisfactory answer will be found in the tendencies'of the forces at 
work under the government of the law, thus : 

The changes in the forms and kinds of labor that are already in 
ojoeration, and advancing with accelerated rapidity, promise a more 
and more complete substitution of artificial for natural labor. This 
modification of the agencies of industrial production, while it pro- 
vides a widening employnient of the varied capabilities of men and 
women, will be attended by a constantly increasing release from 
drudgery, substituting, all along, art and skill and thought for 
mere muscular force in its ruder forms ; and, so, mingling mind 
with matter will become educational, developing, while employing 
the brain and nervous system, and thus more and more effectively 
counterpoising the lower animal impulses. It is among the masses 
of the people, the indistinct individuals of the lowest «lass, that 
the remedy is most needed ; and here, we have in the very labors 
which they must pursue the opportunity and means for the happy 
working of this law of betterment. The process is, mind, ever 
more largely mixed with sinew in the production of the commodi- 
ties of the labor market. Horses grow more valuable as they are 
released from the draught of freight and raised to finer and higher 
service; so, men and women remitted from the lower to the higher 
forms of labor become of more value to themselves and to the 
world. 

We look now for better and better diffused intellectual educa- 
tion in the future, in the confidence which the present over the 
past inspires. Another source of brain development and an 
effective addition to its counter-balancing power : — Shall we have 



92 POLITICAL ECONOMY. 



1 



an improved, a scientific agriculture, involving both animal and 
vegetable physiology and chemistry, practically applied, with 
something of meteorology added ; helping on the one side to re- 
plenish the stores of sustenance ; and, on the other, through intel- 
lectual improvement, to restrain the excess of requirement where 
it generally occurs ? 

Again — do we look for a progressive improvement in the morals 
of the masses, and a corresponding amendment in the administra- 
tion of social, civil, and inter-national justice ? This promise, also, 
carries the double aspect of correction in the aggregate demand 
of the consumers and in the economy of consumption. Moral re- 
finement will give the required supremacy of the man proper over 
his insurgent animalism ; and, its prevalence will at the same time 
check the waste of war, the misdirection of industry, by changing 
the abuse of its products into their proper use, from agents of 
death to provisions for life. In a thousand ways the future, 
growing, as the present has grown upon the past, presents itself 
in expectation as a restorer of that Cipiilibrium among the activi 
ties of the human organism, on which depends a due adjustment 
of the living man's requirements to the material things appointed 
to sustain him. 

D. But still the prevalent disharmony, which you admit, calls 
for some explanation consistent with the alleged beneficence of 
terrestrial arrangements. How do you meet the incongruity of 
the course toward the goal at which it is destined to arrive ? 

T. Peiihaps there is a rude harmony discoverable now in what 
seems to deny it. The Malthusians regard the prevailing prema- 
turity of death, in the present and past disordered conditions of 
society, as a remedy for an excessive production of life. That is 
the meaning of their preventive and corrective checks — abstinence 
from marriage, war, pestilence, and famine — all of them murder- 
ous in operation as in intention. But suppose we take the opposite 
ground, and see in the casual and jrartial excess of life a provision 
to meet and supj.ly its waste in conditions which tend rather to 
extinction than to re})letion and plethora. Surely the problem 
turns two sides into the debate. The burden of reconciliniji; the 
ways of God to man falls upon those who find such contradictions 
in the policy of the terrestrial economy. 



WAGES, PROFITS, AND INTEREST, 93 

A summary of the conclusions from the law of population, as 
we understand it, may be put compactly into this form : The waste 
of human life in the past, and continuing; in the present, is due to 
an abnormal preponderance of the animal over the intellectual and 
moral faculties. 

That waste is not the corrective of a blunder in the system of 
the Creator, but results from an abuse of the reproductive func- 
tion ; and its casual excess is a provision for the waste incident to 
a broken balance in the system of human functions. 

Population is self-regulative. In the organic offices of the 
human constitution there is a persistent effort, with a promised 
success, in the establishment of an equilibrium in the action of the 
individual propensities, and resultingly in an adjustment of supply 
and demand between sustenance and requirement in the relations 
of man and earth. 

The moral of this theory is healthy, happy, holy, and, therefore, 
it is true. 



CHAPTER X. 
WAGES, PROFITS, AND INTEREST. 

T. Having discussed the sources of wealth, the law of popula- 
tion, and the capability of the earth to supply sustenance to its 
inhabitants, we are next concerned to see what provision there is 
in the order of human affairs for the distribution of the products 
of industry among the several agents engaged in the world's work. 

D. J. B. Say treats the causes and movements of Avealth in 
categories equally symmetrical, comprehensive, and exhaustive ; 
happily expressed as " The Production, Distribution, and Con- 
sumption of Wealth." It strikes me, however, that you do not 
adopt his formula, or provide for its method in the plan of our 
studies. 

T. No ; because I do not accept it. I was delighted with it 
when first I met it on the title-page of his treatise. It seemed 
so clear,, so logical and complete : another "Rule of Three," like 



94 roLiTrcAL economy. 

that of proportion in arithmetic, that it promised a methodical and 
■well-balanced system of study, by which the understanding could 
work out all the problems in its domain, as surely and exactly as 
clockwork measures the minutes of time, and announces their sum- 
maries " as clear as a bell." It promised to flash like an electric 
spark through tiie muddle of matters reijuiring analysis, to make 
every element in the chaotic mass dance up to its partner, and to 
organize all the individualities into clusters of classification, and 
so produce a science of the uncertainties which perplexed me. 
I had not a doubt that it pigeon-holed the puzzles of history, phi- 
losophy, and the affairs of practical economy, as in a cabinet of 
curiosities, ordered and methodized in the form of a working 
theory. 

D. It seems to me that yoix expected too much from the pro- 
gramme of the title-page ; and would, therefore, judge too severely 
the answering treatment in the body of the book. For which I 
am prepared by the irony not entirely concealed in the report of 
your tir^t impressions. 

T. I was young in the study ; and I was too hopeful, be- 
cause I Avas so hungry for the promised truths ; I believed the 
promise fulfilled, the revelation oracular, the book of interpreta- 
tion sealed, and all the subject-matters finally disposed of. But 
from this umpiestioning acceptance there soon arose dissentients. 
The school began rehearsals, expositions, and illustrations ; col- 
lege professorships were established ; political economy became a 
branch of the higher education ; thence came a crowd of sects 
under the common confession of faith, making a mixture of doc- 
trines, and a scattered collection of believers who do not believe 
each other. 

7>. You are sweeping with a new, a very new broom, so that 
one can see nothing clearly through the dust tiiat you raise. 

T. Raisiui; a dust is the way to scatter it. The title of Say's 
treatise is a definition, a sunmiary table of contents. In logic a 
definition is such a description of a^ thing as includes all that be- 
longs to it, and excludes everything that does not belong to it. 
Now look at his fascinating formula — Production, Distribution, 
Consumption — a complete circle of movement ending in its begin- 
ning, going out at the same hole it came in at. Consuniption is 



WAGES, PROFITS, AND INTEREST. 95 

not destruction or annihilation. Its economic meaning is repro- 
duction ; it is use, which is a very different thing from destruction. 
Ore is not destroyed when it is consumed in the production of iron ; 
food is not destroyed when it is converted into bone and muscle. 
I need not multiply instances. Matter is indestructible. In every 
form of consumption there is only conversion. Say's third cate- 
gory is exactly his first over again. His triad of terms is thus 
reduced to a duad, and the last of them goes to the deuce. 

D. You do not object to the colloquial use of the word. 

T. Not at all. I object to the limited meaning given to it in 
logical description. Say never gives the word Consumption the 
proper or any force of reproduction. His entire definition of the 
agents and movements of wealth is lame in its primary proportion, 
and limps through the whole course of discussion. Owing to this 
fault his followers have easily converted his system into a science 
of exchange — a huckster's philosophy — and so it must be if the 
economic agencies end in consumption not regarded as repro- 
duction. 

P. You leave in the definition only two categories — production 
and distribution. 

T. My objection to it goes still further, when used as the school 
employs and limits the proper range of the word distribution, by 
which they mean nothing but exchange- of commodities in the 
market, never a due distribution of values among the several pro- 
ducers and contributors. 

D. I cannot yield this point, so stated, without some proof. 

T. The first testimony to the charge that " distribution," in the 
meaning of the generally accepted and common use of the theorists 
of the Say school, does not intend division of products or their 
values between capitalists and laborers, and embraces nothing but 
the merchant function with its subsidiary agencies, is distinctly 
declared by Blanqui, who is an orthodox disciple of Say. I quote 
him : " The subjects which affect us so nearly at present, such as 
Wages and Population, seem scarcely to affect him (J. B. Say). 
He has considered production far too independently of the pro- 
ducers. He was seduced by the prodigies of English production, 
and did not think of the human suffering which follows in its train. 



96 POLITICAL ECONOMY. 



■' 



He looked upon wages as sufficient, not because they enabled the 
laborer to live, but because they kept him from dying." 

D. Do you mean that this question is entirely ignored by the 
writers whose works fill the libraries of our colleges, and crowd 
the shelves of our students, scholars, and statesmen ? 

T. I do not say that they never advert to the subject, for I have 
already recited a striking and startling reference to it in the criti- 
cism of a capable and sincere admirer of the Treatise of the Great 
Apostle of the Faith. Let me give you another oracle : Ricardo, 
of at least equal renown with J. B. Say, in his " Principles of 
Political Economy," defining the natural price of labor, says: "It 
is that price which is necessary to enable the laborers, one with 
anotlier, to subsist and perpetuate their race without increase or 
diminution." 

There you have it, plump and plain. The fundamental princi- 
ples of Say, Ricardo, Mill, McCulloch, Whately, Chalmers, and 
their American disciples issue legitimately in the like result. 
Their theory of wages accords just the care and provision for the 
animate, that it does for the inanimate, machines in production. 
Partnership- right in the commodity produced is not admitted. 
Wages, the natural wages of this philosophy, represents the share 
given to the steam-engine, wood, water, and repairs — so long as 
the thing is worth its feed or fuel and repairs. Chattel slavery is 
the ownership by the master of the body, and so much of the mind 
of the slave as is necessary to work tlie machine, subject to the 
incumbrance of maintaining the life and powers of the chattel in 
sickness and health, through infancy and old age. This economic 
theory of Avages relieves the employer of all such ministries in 
misfortune, and of all responsibility for the incidents of the bar- 
gain. 

I). This is revolting. The honored names which you have 
quoted for such an issue of their theories did not intend the in- 
humanity logically chargeable against their speculations ; and 
there must have been protests, clear and strong, recorded against 
them. 

T. Yes, there are dissentients, men of great Aveight intellectually 
and morally, greater, I think, than those whom they confronted in 
the field of speculative investigation ; but they are not among the 



WAGES, PROFITS, AND INTEREST. 97 

current — do let me say, the vulgarly popular authorities : such 
men as Sismondi, Rossi, Droz, Blanqui, and Bishop Berkeley, and 
I do not hesitate to add St. Simon and Fourier. Of these men 
and their views of economic laAvs the common people never hear, 
and their works are all but strangers to the students in our institu 
tions of learning. 

There is, however, another form and force of protest. It is 
heard in the conventions of laborers and strikers, in language 
neither formal nor scientific, nor always wise nor wholly just. It 
is in the civil insurrections working like an earthquake among the 
toilers, angry at their wrongs. With these are joined the idlers 
who are busy stirring up the mud in the troubled waters ; and, 
through the confusion of the wrangle is heard, not infrequently or 
ineffectually, the voice of the benevolent and considerate, who are 
attentive to the signs of the times. 

I do not impeach the opinions or purposes of either of the parties 
to the great strife ; I do not hold the insurgents inexcusable for 
the unwarrantable or the unwise in their manner of acting, I am 
only answering your question. 

P. Is there no known economic law looking to justice, peace, 
and hope, and promising, if not already effecting, order in the 
movements of the commonwealth ? 

T. A genei"al answer to your question is found in the manifest 
progress of society all the way up from savageism to the highest 
civilization attained. Some law or laws must have been working 
the amelioration in the condition of the masses that their history 
exhibits. In the savage state things are so far common to all that 
the allotment and title to property are determined by the simple 
act of appropriation and the power and will to hold possession. In 
this condition there is no such permanency of ownership as gives 
rise to a class of capitalists, and to the reciprocal class of laborers at 
wages. There is no system of progressive accumulation. Pi'o- 
vision for use is a hand-to-mouth system of property. There being 
no surplus of production reserved, there is no industrial enterprise 
and improvement, in our sense of the phrase. Where thei^e is 
nothing of capital and wages in the relations of men, there are 
none of the inequalities of property, and, none of its possibilities of 
better things to come. 



98 POLITICAL ECONOMY. 



I 



Civilization grows through barbarism and all its own earlier 
stages till capital and labor attain a defined order, founded in 
expediency, near enough to natural right to admit and promote 
social and individual progress, but allowing great inequality in 
the condition of the joint contributors to the mass of the general 
wealth. But a just and wise allotment of the profits of industry 
is not yet anywhere attained. 

D. In the vastly varied fortunes of the rich and poor, the bet- 
ter order of things encounters hostile interests, and the errors in 
civil and social administration derange the distribution of profits 
in freedom, even as they do in slavery. Yet I suppose that 
through all disturbing circumstances there must be a potential 
movement in the direction of individual, as well as of general 
welfare. 

T. The field of research which you open is quite too broad for 
our present purpose ; perhaps, for our powers of solution. Let us 
confine ourselves to the question of wages, and the principles 
which seem to govern its fortunes. Mr. Carey meets it with the 
following propositions : — 

" 1st. Labor gains increased productiveness in the proportion 
that capital contributes to its efficiency." This is self-proved. 

" 2d. Every improvement in the efficiency of labor so gained 
by the aid of capita,l is so much increased facility of accumula- 
tion." This proposition also stands self-proved. Thus increase 
of stock, or fund, or wealth, is eifected, and the means and 
inducements of equitable distribution are provided and made 
possible by the terms of the position taken. 

"od. The increased power of production and accumulation 
lessens proportionately, in labor-cost, the value of similar pro- 
ducts previously existing, and brings them more easily within the 
purchasing power of present labor." 

D. Then labor must gain something no^ intrinsically its own by 
joint action with capital. How is that? It is commonly believed 
that labors borrows nothing from capital, but in fact, lends it all 
its gains. 

T. A spade is capital to whomsoever it belongs. Labor gains 
all the difference of effectiveness from it that there is between its 
instrumentality and the service of naked hands. Let us under- 



WAGES, PROFITS, AND INTEREST. 99 

stand this thing. Labor and capital are not on a see-saw playing 
upon a fixed pivot or fulcrum, with a fixed range of motion 
allotted and circumscribed, so that one can go up no higher than 
the other goes down. They are joint actors, not antagonists. If 
two persons find a commodity ready made, any division of it to 
one of them is a reduction of the share of the other. But the 
laborer and the capitalist are jointly concerned in creating a new 
value — an increase upon the subject and service — of which each 
may have a share without robbing the other of anything that he 
independently owned before the effort made for the enhancement 
of the principal investment. If capital is increased with the aid 
of labor, and labor is made more productive by the aid of capital, 
the enterprise is mutual, and the accumulation is a joint-stock, to 
be distributed equitably, and there is no give and take in the 
division. Capital, in the last analysis, is garnered labor, it has 
been earned or acquired by its possessor and is his own. Capital 
has been happily called "dried labor." This is not a figure of 
speech only, but a matter of fact, if the logical maxim is true — 
the cause is in the effect. 

P. The first and second of Mr. Carey's propositions are clear 
enough, but, for the third ; how does increased accumulation 
lessen the labor-cost of commodities to the consumer? Of course 
the market price or exchange value will be reduced, but how are 
wages thereby aflFected ; for it is the resulting distribution of ben^ 
efit to the laborer that we are now concerned with? 

T. A history of wages during the progress of advancing pro- 
ductiveness would answer this question, and answer it satisfacto- 
rily ; but let us first look at the operative causes at work. Mr. 
Carey gives the first step in the solution by his definition of value, 
which in his rendering is the cost of rei^rodiietion ; in effect, that 
nothing can command a higher price than the cost of producing a 
similar thing or substitute at the time of the purchase; and, 
accumulation producing increased cheapness of price, is the bene- 
fit of the consuming laborer, as of all other purchasers. The 
argument runs thus : The laborer must receive his share or wages 
out of the product to which he contributes — no other source 
exists. That possible share depends upon the quantity of the 
product. The larger this, the greater the fund upon which he 



100 POLITICAL ECONOMY. 

may draw. Here we have provision for enhancement of wages in 
due proportion with increase of productiveness (which, it is to be 
noted, is in part the fruit of the cooperative capital employed). 
This is the possible of his participation in the improvement of his 
own department of industry, and of similarly improved industries, 
whose products he needs for his use. 

D. Let me interrupt with the suggestion that the capitalist is 
not only the owner of the product but of the labor which he hires 
or purchases ; and, so far, has the command of prices. How does 
reduced market price etFectively and necessarily operate to increase 
the price of labor? The forces are not only in the ability, but in 
the interest and the will of the capitalist, that influence the wages 
accorded to tlie workman. I do not see how, on business princi- 
ples, the employer is forced or induced to divide profits so equita- 
bly, unless by strikes or public opinion invoked and enforced by 
social sentiment, and by the indirect influence of political power 
in representative governments — causes which do not come within 
the domain of natural law, and are not everywhere and always 
operative. 

T. To say nothing of the reserve of compelling power that there 
is in the laboring classes to be feared or exerted in favoring circum- 
stances, or, of the force of the sentiment and sympathies of justice 
embodied in public opinion, and which are not entirely inactive even 
in the conscience of the capitalist, — motive or motor impulse is 
found in such considerations as these: — The human machine, like 
the inanimate, and for the same reasons, yields results to the 
employer in the measure of its capabilities. Its highest condition is 
necessary to its highest service-worth. Over and above the physi- 
cal energies of the one, corresponding to the structural poAvers of 
the other, the human worker has his most available force and pro- 
ducing worth in his moral and rational faculties, in his skill, his 
fidelity, and his ambition. The cultivation of these, up to their 
highest serviceableness, requires the opportunity of some leisure, 
the stimulus of current comforts, and the incitement of future hope. 
The best use of a man cannot be had upon wages barely suflicient 
for the lowest necessities of animal life. Even the owner of a slave 
must purchase extra service by extra reminieration. Rewards are 
as mucii the policy as they are the equity of business. The felt 



WAGES, PROFITS, AND INTEREST. 101 

force of these induceraents is manifest in the wages and salaries of 
every kind of service. The ox has more brute force, and the 
steam-engine has more mechanical power, yet these are hired at 
a cheaper rate than the labor-market affords to the high human 
faculties on which capital depends for its largest profits. The ass 
knoweth his master's crib, and expectation quickens his movements 
toward it, but a man has the incitement of things and hopes beyond 
the clink of the corn-chest. Even when he sleeps his dreams are 
of the future. The employer knows all this and estimates its value. 
He knows that nothing is to be had for nothing, and thus the con- 
tributary effectiveness of the. workman secures to him a growing 
dividend in the growing value of productiveness, which, indeed, is 
not all his own, or the result of his own agency, but without which 
the enhancement could not be made. The difference between the 
rates of wages and salaries, from those of the lower forms of labor 
up to the highest, exemplifies the natural operation of these con- 
siderations. When you can tell me why one man gets but one 
dollar a day for his work, and another gets five, you will have 
clearly read this riddle. 

P. So, " there is a tide in the affairs of men which takon at the 
flow leads on to fortune." How about the ebb ? 

T. The law of progress rules in advancing communities. The 
retroo-radins; owe their misfortunes to its violation, which is a neg- 
ative proof of its truth. The law, whose operations we have noticed, 
rules in the policy of business. There is another law inherent in 
the nature of things, tending to the same issue — it is that in ad- 
vancinof communities nothing can increase in value but Land and 
Labor. They are both advanced in exchange and intrinsic value 
by the cost of their production, by the improvement of their quality 
and productiveness, with the necessary result that the products of 
both alike when they take the shape of commodities and services 
in exchange, regularly decline in price. 

P. That sounds like a paradox. 

T. It is not the less true and inevitable. Land, as the word is 
here used, stands for all the materials, and Labor for all convert- 
ing agencies. Land as it lies in nature is a forest, a jungle, a 
morass, a heath, or a rock. It must be subdued to use, and it is 
valuable in the degree that it is subdued and improved. This im- 




102 POLITrCAL ECONOMY. 

prove ment is measured by the labor-cost expended and reflected 
upon it. Thus, labor is incorporated with land, and they grow 
together in worth. They are inseparable in estimation as in service. 
Their products must cheapen in the ratio of their increased abund- 
ance. If an acre that formerly produced only 10 bushels is made 
to yield 40, and, if half a dozen hands can make as much cotton 
thread as 70,000 women can spin in the same time, the products 
must cheapen in proportion to their abundance of yield at the same 
cost of production. The substance of the land, and the man in 
himself, increase in value by and according to the costs of their 
improvement ; and it is a general law that the most costly machinery 
yields the cheapest products. A railroad, with its bridges, engines, 
and rolling-stock, costs millions, but its service in transportation of 
men and things, in the aggregate, costs hundreds of times less than 
porterage by men and horses. Not a dollar is invested in any 
sort of mechanism but with the view to cheapen its [jroducts. The 
effect of all improvements in the process of manufacture is to more 
and more overcome the resistance of the raw material and to di- 
minish the cost of production. The advanced value of instruments 
and agents is encountered for the very purpose of diminishing the 
cost of their service. The diminishing value of products applies 
to uses, not to the instruments, whether human or mechanical. 
The effect of Progress is the enhancement of Power and increase 
of uses by subduing nature's resistance. 

D. The effect of labor-cost in creating worth or exchange 
value cannot be universal. 

T. 'You are thinking of the instances of genius and natural 
endowments, as they diminish the cost of actj^uirement by lessening 
tlie time and effort required to develop their availableness. But, 
if everything must have a cause, snch specialties of capability have 
been preparing through past generations, and have cropped out in 
the present, just as the richer soils have been produced from the 
barren rock by the working of sunshine, air, and water through 
the ages. Nature works for us in the progressive improvements 
of her times and seasons, just as she does in the forces of the 
mechanical powers, her labor-cost in production, issuing in ready- 
made values to us. One thing is clear — the cost of repi'oduction 
determines the price of the extraordinary as well as of the com- 



WAGES, PROFITS, AND INTEREST. 103 

monest powers of men and things. At what price could Barnum 
reproduce a Jenny Lind ? At the expense of educating a thousand 
students, and possibly with a failure in every trial. The fancy 
case of finding a diamond on the seashore at no greater expense 
than the trouble of picking it up, is an instance of trifling with 
conundrums, instead of exploring the natural course of law in con- 
stant operation ; but even this favorite play at puzzles is not un- 
manageable by the fair application of the rule. That stray dia- 
mond is, perhaps, not overvalued by the cost Of reproduction, if the 
logic-mongers were put to work to find another in the same way. 
Moreover, it will not command a higher price than the cost of 
washing for the like thing in the mines of Brazil. If there be any 
doubt that labor is the cause of all values, there can be none that 
it is their measure. 

P. That the effective remuneration of labor must follow the 
accumulation of the general wealth is obvious from the immense 
expansion of the market for commodities. It is understood, upon 
safe statistical evidence, that, seventy years ago, the people of 
England consumed but one yard of cotton cloth per head, and that 
now they buy and use 35 yards to each individual. In all such 
cases as this wages have either been levelling up or prices have 
been levelling down, and the result is an increase of the purchasing 
power of the earnings of the industrial classes. 

T. The general progress and improvement in the condition of 
things which we call civilization is evidence enough. Eight or ten 
centuries since the society of Europe consisted of a few masters 
and a multitude of serfs. The law that has worked through all 
the changes now realized still works for the elevation of the masses. 

P. The " authorities," not finding any law of distribution gov- 
erning in the relations of capital and labor, abandon it to chance, 
to competition, to " supply and' demand." This irregular regu- 
lator has, in fact, great force in the practical settlement of the 
question ; yet there may be some law running through all the 
attendant disturbances, — some constant endeavor toAvard a pro- 
vided end and issue in harmony. 

P. The process hitherto has been so slow that it may be sus- 
pected of lying almost dormant at times which most required its 
activity. The pauperism of the one-twentieth of the inhabitants 



104 POLITICAL ECONOMY. 

of Great Britain, as lately as in the year 1870; the compulsory 
emigration of some millioiis of the people, and the desperate con- 
dition of many other millions, stand as striking exceptions to the 
operation of your occult law of progressive betterment. 

T. Slow, but sure, and vastly effective. IMuch of the ohl-time 
bondage remains, but much has been removed. The kingdoms of 
Europe are already in eifect republics, governed by, as they rest 
upon, numbers, of which the industrials are the majorities, and- 
these are learning to exert their power. 

D. You admit that the wages-system is only an ameliorated 
bondage, and that the benefits of freedom are contingent upon 
circumstances not under control. 

2\ It has been wisely said that adjectives are the most dan- 
gerous enemies of substantives ; and, let vm add, that epithets 
are not safe descriptions. We don't speak of the disabilities of 
infancy and pupilage as modes of ameliorated bondage. That 
wliich is progressive cannot be described as fettered. The child 
is groAving even while he creeps ; he toddles insecurely, and often 
tumbles after he has got upon his feet ; the youth is handicapped 
with his lingering childhood, but the laws of life are working in 
him, promising the full powers of maturity in due time, — that is, 
as soon as he is able to exercise them well. 

P. The broad scope of history certainly proves a prevailing 
law of progressive improvement in the laboring classes of civili- 
zation. 

T. In periods of years long enough to exhibit the current of 
this interest, however disturbed by its irregular ripples and inci- 
dental obstructions, its headway is marked by such measures as 
these : — 

The wages of bricklayers, masons, and carpenters at Greenwich^ 
England, in 100 years (from 1735 to 1835), doubled in money 
price (from 2s. 6c?. to 5s. per diem). 

According to William Penn's cash-book, to earn one ton of flour 
re(iuired the unskilled labor 'of 137 days; in 1831: (135 years 
after), the like labor earned the price of one ton of flour in 78 
days. 

In France, in the year, 1700, the annual wages of a family of 
Al persons is given by competent statisticians at the then price of 



WAGES, PROFITS, AND INTEREST. 105 

21 bushels of wheat — in 1840 at 60 bushels.. In that period 
of 140 years, agricultural products of every kind quadrupled. 
The population was not nearly doubled, so that the distributive 
share in wages was very probably more than doubled. 

The weekly wages of women in domestic service, in the United 
States, averaged 62| cents in the year 1814; in 1860 they rose 
to $1.75, and now, in 1880, they range from $2.00 to $3.00 in 
money. 

D. The purchasing power of money varies at long intervals ; 
and this point -is involved in the relative worth of nominal wages. 

T. Let us try it upon the relative value of the wages of house- 
servants in the period taken — 46 years from 1814 to 1860 — dates 
which mark the rise from the lowest average to the time before 
our civil war, and the suspension of specie payments. I give it in 
tabular form for the better presentment to the eye, compared with 
the prevailing prices of the several commodities which the hireling 
needed to purchase with her earnings. 

Weekly money wages in 1814 $0 62^ Weekly money wages in 1860 $1 75 

1 yard of dimity . . 62|^ 7 yds. dimity at 25 cts. . 1 75 

2 yds. sheeting at 31^ cts. 62|- 14 yds. sheeting at 12^ cts. 1 75 
1\ yds. calico at 25 cts. . 62|- 14 yds. calico at 12| cts. . 1 75 
2|^ yds. shirting at 25 cts. 62|- 17|- yds. shirting at 10 cts. 1 75 

Other articles of dress had fallen greatly in price, if not 
equally in the time. With the cost of food and lodging she was 
not.concerned, except as to quality and comfort, which with many 
other conveniences, had in the mean time greatly improved. For 
general results look at the promenades in our streets, and the 
attendance at the churches. The difference between the appear- 
ance of mistress and maid, so strongly marked 60 years ago, has 
entirely disappeared. Moreover, the domestic servant has since 
learned to read, and does read the daily newspaper, as well as the 
lady who employs her, and is even a customer of the circulating 
library. How much of their earnings these women are able to 
contribute to the support of their churches and charities would be 
hard to guess, but it is safe to say ^.hat the aggregate is equal to 
the like contributions of the entire parish in which they live at 



106 POLITICAL ECONOJMY. 

the beginning of the era of the rise in their money wages. The bills 
of exchange upon Europe, bought with the surplus of their earn- 
ings, amount to hundreds of thousands of dollars per annum in our 
largest cities. Ask their brokers for information as to this item, 
sent to their friends in the "Old Country," and in the "Father- 
land." 

D. You set the " Song of the Shirt" to a different tune; yet 
it remains a doleful accompaniment to the needle-woman's work in 
the common branches of their avocation. 

T. Labor-saving machinery must answer for the difference in 
the fortunes of skilled and unskilled labor employed upon the 
same materials. The drift of events in all forms of production 
and service is evidently and necessarily the displacement of drudg- 
ery by art, the unintelligent toiler by the artisan, as the steam- 
car has displaced the pack-horse in the transportation of freight. 
Old-time uses must give way, if the progress of society is allowed, 
and whatever of them remains to continue the unequal conflict 
with the new, must take the consequences. There is no help for 
it. The new generation must live under the new order. The 
army that equips itself with the flint-lock musket of a century ago 
must go down in squadrons before the troops armed with the 
breech-loaders of the present pattern. 

I). You have selected certain departments of industry, which 
by the record, have greatly bettered the condition of the employ- 
ees. In some cases measuring the real value of money wages by 
the current prices of wheat, in others by the market prices of .tex- 
tile fabrics. Have you no data for a comprehensive presentment 
of the comparative total of income and expense ? 

T. I do not claim a verdict upon the items of evidence adduced. 
Wheat is one of the most uncertain standards that can be chosen 
for the demonstration of the debtor and credit sides of labor. It 
has ranged in England all the way from $1.33 to $2.20 per 
bushel, being often highest when wages were lowest, a'hd always 
capricious in its fluctuations. It was down to $1.14 in December, 
18G4, and up to $2.21 in April, 1808. Besides, its advances and 
declines of price do not follow in. calculable succession, as textile 
and metallic fabrics usually do ; and the fluctuations of the other 
cereals are nearly as great. Such statistics as are at command 



WAGES, PROFITS, AND INTEREST. 107 

must be used when the argument demands them. At best, they 
are more or less approximations to the facts required. For this 
reason I rely on the general indications of economic conditions for 
the basis facts of the case. 

P. I have occasionally seen statements of the wages of men 
and women in certain occupations with specified items of the ex- 
pense of living. Do not such reports throw some light upon our 
subject ? 

T. The Bureau of Statistics of Massachusetts affords such a re- 
port for the year 1874, in which the earnings and expenses of bl 
families are stated thus : 

Average cost of living for each family . . . ^885 62 for the year. 
Average earnings of the fathers . . $619 18 
" children . . 310 78 

929 96 

Number of persons in family, 6 ; number of rooms occupied, 5 ; 
number of children at school, 2 : — Average. 

P. These families appear to have but $14.32 over their ex- 
penses at the end of the year. Not much margin for accidents or 
ultimate accumulation in that amount. 

T. To estimate the avails of their labor look at the items of 
expense allowed. 

Average cost for each family: Rent, $146.58; groceries, 
$350.38 ; meat and fish, $108.28 ; clothing, boots, and shoes, 
$114.65 ; religion, books, papers, and societies, $23.18 ; fuel, 
$51.19 (ranging from $40 to $70) ; sundries, $33.76. Other con- 
ditions — nearly all the rooms carpeted ; 40 houses have parlors ; 
40 families have sewing-machines ; 13 have pianos ; 3 have parlor 
organs ; 16 have money in savings banks ; 2 have insurance on 
their lives; 1 has a fine library; all well-dressed, except 1 ; 1 
passably well ; 1 moderately well ; 1 poorly. 

Of 124 skilled workmen, the fathers of families only, at wages. 
The average of the father's wages, $746.15. These families 
average 4 persons each ; 2 children at school; the number of rooms 
occupied, 5. 

A Massachusetts employments' report for 1873 gives the number 
of males in the factories, over 16 years of age, 177,590 (64 per 



108 



POLITICAL ECONOMY. 



cent, of the total) ; females over 15, 85,939 (31 per cent, of 
total) ; children, 14,075 (5 + per cent, of total) ; total employed, 
277,654. The average number of working days in the year, 280; 
which leave 52 Sundays and 33 week-days exempt. 

P. These figures do not serve to show changes of rates at in- 
tervals long enough to indicate the progress which you believe to 
have occurred in the last 40 or 50 years. Our census reports 
given every 10th year cover the capital, the cost of materials, the 
value of products, and the total w^ages paid in all the manufacturing, 
mining, and mechanic arts pursued in the United States. Why 
not try the changes between 1840, 1850, 1860, and 1870 ? These 
promise authentic data for the inquiry. 

T. I have exhausted myself with many a day's labor upon these 
census i-eports, and have found them utterly useless, and even 
delusive, in the matter of the wages of laborers in the several, and 
in the whole of the avocations which they embrace and profess to 
exhibit. 

P. I had hopes of certain and useful information from the 
official record. 

T. So had I when I was younger in statistical studies. 

These are the factors, or all the available data which these 
reports afford for a history of wages for the three last decades, 
1850, 1860, and 1870: 



Year. 


Hands employed 


Total wages. 


Value of products. 


Wages to products. 


1850 
1860 
1870 


957,059 
1,311,266 
2,053,996 


$236,754,834 
378,878,966 
775,584,343 


$1,019,106,616 
1,885,861,676 
4,232,325.442 


23.23 per cent. 
20.10 " " 
18.32 " " 



This statement gives the ratio of the total wages to the total 
product, but nothing of the relative amounts to either class of 
employees, men, women, and children — and nothing more specific 
for our use in anything else which the reports aftbrd. The number 
of females is given for 1850 and 1860 ; and for 1870 the number 
of women and children, together, but nothing exact as to the dif- 
ferent rates paid to the unlike classes, nor of the time employed 
by either of them, nor of the varied rates in the unlike employ- 
ment of the individuals in the same classes. 



WAGES, PROFITS, AND INTEREST. 109 

Observing the decreasing percentage of the Avages to the value 
of the products between 1850 and 1870, but finding the inference 
contradicted by all the other information attainable, I was at first 
inclined to attribute it to a transfer of producing power from 
hand-labor to the increase of machinery ; but there is nothing in 
the facts and figures given to support such an explanation. 

There the wages of men, women, and children are lumped in 
statement, and the specific value of each is not given. What is 
gained by dividing a total value of products by the total number 
of mixed classes drawing very different rates from it ? An 
expert put the compensation in 1850 at five-ninths for women to 
nine-ninths for men ; but this result was guess-work then, and far 
from a guide at any subsequent date. 

D. Is the Census Bureau aware of these difficulties and un- 
certainties, and the resulting impossibility of comparing the changes 
in the rate of wages at successive decades, notwithstanding the 
elaborate details which occupy the reports ? 

T. The superintendent states all these sources of illusion in his 
tabular statements, and many more equally fatal to the supposed 
worth and reliability of the returns made by the assessors to the 
central office. In particular, as relates to the relation of wages 
to products, you will find in the 3d volume of the 9th census — that 
for 1870, he is' careful to exhibit the varied ratio of wages to 
products in five classes of manufactures, showing that in his 1st 
class the wages are equal to 51 per cent, of the value of the pro- 
ducts ; in the 2d class, a little less than 25 per cent. ; in the 3d 
class, 31 4- per cent. ; in the 4th class, 20 per cent. ; and in the 
5th, only 3f per cent. In the averaged total of the five classes, 

Now, mass these items, not forgetting the difference in the num- 
ber of hands of the several classes ; the diftering rates of the dif- 
ferent classes ; the different earnings among the men, women, and 
children in each group, which is not reported, and you will be able 
to pronounce an opinion upon the possible result to our special 
inquiry from such sources of information. 

The superintendent goes further. He treats the report of the 
capital employed as falling short of the truth, probably to the 
amount of three-fourths of the actual amount invested. He pro- 



110 POLITICAL ECONOMY. 

nounccs the value of the materials unreliable, and even of the 
pi'oducts he shows that the totals given exaggerate the increase of 
1870 over 1860 at no less than $307,866,792,— nearly 8 percent. 

The wages column is rendered worthless and delusive by the 
circumstance that in many occupations the employers nearly equal 
the hired hands in number, — such as blacksmiths, shoemakers, 
tailors, millers, watchmakers, and the like. The labor of these 
people is not valued in the wages column. The superintendent 
remarks that, in 1870, there were about 20,000 of these artisans 
whose products are valued, but their work is treated as profits, 
and is not given as wages. 

In agricultural labor the matter is still worse than in the me- 
chanical, from obvious causes, which I need not detail. Wages 
paid and reported in this industry, whose products are registered 
as equal to all other occupations, are, perhaps, not ecjual to a hun- 
dredth part of the labor performed. Yet both are given in the 
census tables, and have their distorting eftect upon the ratios 
derived from the totals so made up. 

More than all these troubles, and at the bottom of all the incon- 
gruities, is the fact that many hundreds of assessors are employed 
in furnishing the returns for the equally numerous districts in the 
nation. They estimate quantities and values without a uniform 
standard, and with unequal capabilities and grades of fidelity. 
Beside all this, they have impossibilities to perform. The central 
office understands these sources of error perfectly well, and does 
the best it can to put its chaos of materials into order, but with 
uncertain success. 

In full view of the case, the anxious inquirer must run the 
hazard of drawing inferences from the figures submitted for his 
guidance. 

P. If such inaccuracy is inseparable from our census system in 
matters of wealth, I do not wonder that Kngland confines hers to 
the enumeration of persons Avith their conditions of sex, age, physi- 
cal and social circumstances. But how do their statisticians esti- 
mate the nation's wealth and its productive industries ? 

T. It is worth while in this connection to note their methods, if 
for no other purpose than for its implied criticism of our own. 

Totally rejecting the process of actual assessment, and, as I 



AVAGES, PROFITS, AND INTEREST. Ill 

think, for sufficient reasons, they resort to such sources of infor- 
mation as these : — The tax registers ; excise taxes upon domestic 
products and sales ; taxed incomes ; investments in stocks ; pro- 
bates of decedents' estates ; fire, marine, and life insurances ; 
rental of real estate ; bank reports, and other indicise of business 
affairs. The distances which lie between such data as these, and 
the results sought for are, indeed, both dubious and considerable ; 
but the process is the best that can be employed. Observe that 
they never concern themselves with principal values of any species 
of property, but with the current proceeds ; rightly judging that 
wealth is in what property yields in the various industries, not in 
what it is valued at in speculation. This is what they mean by 
saying lands and stocks are worth so many years' purchase, from 
which, if you like, you may infer the capital value. 

P. Do the authorities concur nearly enough to support their 
several calculations by the method which you think the better one ? 

T. No ; they differ widely, taking, as they do, different bases 
of estimate. Gladstone takes the income tax for a measure of the 
growth of the wealth of the kingdom of Great Britain (Ireland 
being excluded), and thence infers that it is now being doubled in 
about 19 years. J. R. McCulloch recently adopted the exports 
with a very different result, and as widely different from his 
earlier estimate. 

Colquhoun, the best and safest of these calculators, rendered the 
rate of groAvth in 1812 as doubling in 20 years. ■ Pablo Pebrer, 
taking Colquhoun's estimate for his basis, concluded that in 1883 
it was doubling in 21 years. Lowe and Porter, in 1841, put it 
at 18 years. Regarding the very different rate of increase be- 
tween the dates for which Gladstone and Colquhoun made their 
calculations, they differ very widely, though their figures seem to 
corroborate each other. 

The worst of all the estimates ever made was by J. R. McCul- 
loch. About 30 years ago he committed himself to the opinion 
that " sixty years is the shortest time in which capital, in an old 
and densely peopled country, can be expected to be doubled." 
He was, during 35 years, the statistician of England ; but the bias 
of his doctrine, that population outruns provision for the race, per- 



112 POLITICAL ECONOMY. 

verted his arithmetic, and made his deductions from his figures as 
fanciful as if he had not been able to count his fingers. 

The basis of Gladstone's estimate — the income tax — is always, 
and in all countries, infamous for its falsehood. Lord John 
Russell describes it as a tax in which "inequality, vexation, and 
fraud are inherent." 

INIcCulloch's : The value or rather the official valuation of home 
products exported to foreign countries is quite as bad as Glad- 
stone's. The fluctuations of prices that truly occur, the under- 
valuation of goods subject to ad valorem duties in the ports to 
Avhich they are consigned, the indifference of custom-house 
officers, to prices of merchandise on which no export duty is 
charged, with the tricks incident to foreign trade, make export 
values an exceedingly unsafe ground for calculation. Besides 
they take no account of, and bear no constant proportion to the 
home consumption of domestic products, 

P. Have you no guess at tlie growth of wealth made upon the 
study of the estimates with which you are familiar ? 

T. I have made my calculations, and from them I guess that 
Great Britain is now, I mean since 1850, increasing her wealth 
at the rate of doubling it in 20 years, or 3| per cent compounded 
per annum ; and that the United States double their aggregate 
Avealth in 9 or 10 years, or 8 per cent, per annum. The increase 
lias been twice as rapid in both countries in the decade ending in 
1860, as in the previous one ending in 1850, The more careful 
treatment of this subject must be deferred till we come to con- 
sider money and prices. 

D. The conclusion of the whole matter then is, that we have no 
reliable data for a correct judgment of the progress of Avages, re- 
ported officially or given by experts. What other evidence have 
we tliat is satisfactory or worthy of dependence ? 

T. I cannot measure welfare in money values. I cannot re- 
duce the rewards of labor to dollars and cents, and, of course, I 
cannot show the figures of arithmetic for the advancement of its 
benefits. But the current of civil history at every epochal wave 
in its onward flow proves it beyond cavil. The people, as distin- 
guished from the old-time ruling class, — in all countries that have 
been under the influence of the advancino; centuries and jrenera- 



WAGES, PROMTS, AND INTEREST. 113 

tions, have risen from bondage and its poverty to that power in 
social rank and civil government that deserves to be called free- 
dom. Their supplies for their daily wants and their opportunities 
as social beings have increased immeasurably. 

The distribution of accumulating wealth has tended to still bet- 
ter and better provision for the masses. All its forms and fruits 
have been constantly descending to the lower social levels. Edu- 
cation, the useful and the fine arts, the luxuries of sense and sen- 
timent, step by step with their general advancement, have been 
dispersed and divided among the many, in even larger measure 
than to the few. If we subtract the idle, the criminal, and the 
naturally incapable from the supported and dangerous classes, the 
merest fraction of the population will remain to impeach the gen- 
eral prosperity. An immense proportion of our citizens have ac- 
quired fortunes by their labor and current opportunities of profit. 

The improvement made in labor-saving machinery in the past, 
and most remarkably in the present time, has the effect of cheap- 
ening commodities for general use, and by remitting the industries 
from muscular drudgery to the useful arts, presses up the lower 
strata of society faster and better than all the moral and intellec- 
tual aids, usually relied upon, could effect without these economi- 
cal helps. 

All these things are the outcome and the exp'^ession of the 
increase of wages. The people have tvorJced out their redemption 
and enfrancliisement. I do not attempt to express these achieve- 
ments in numbers, or their enhancement in percentages, for I do 
not know the money, value of the qualities of manhood, though I 
am sure that they have their uses there also. I can recognize 
and feel the difference between a slave and a sovereign, but the 
figures of arithmetic do not serve to express it. 

P. I wish you would give us the general issue of the facts and 
arguments you have employed, as they apply to the history of 
wages in our own country. 

T. I believe that wages of men doubled in money value in the 
46 years between 1814 and 1860. I take 1814 as the date at 
which steam-power and modern machinery were introduced in 
manufacturing processes in the United States; and I fix upon 
1860 as the time when nominal prices had not been disturbed by 



114 POLITICAL ECONOMY. 

our Southern rebellion, producing the suspension of specie pay- 
ments. A period long enough to embrace the ordinary, or I may 
say, the natural changes of time and circumstances ought to be 
taken into the inquiry into the governing laws of the subject. 
Fluctuations through long periods, usually settle themselves into 
an equilibrium that represents their undisturbed tendencies ; and 
my general conclusion may be thus expressed. With the growth 
of wealth and population, the power of combination increases 
with a corresponding increase in the power of accumulation ; 
every step in this direction being attended by decline in the 
power of the already existing capital to command the services of 
the laborer, and by an increase of the power of the latter to com- 
mand the aid of capital, and — 

The proportion of the increased product assigned to the laborer 
tends steadily to increase, while that of the capitalist tends as 
regularly to decline. The quantity assigned to both increases — 
that of the laborer, however, growing far more rapidly than that 
retained by the capitalist. 

The tendeyicy to equality is, therefore, in the direct ratio of the 
growth of wealth, depending, as it does, upon the productiveness 
of labor. 

I infer, also, from a review of all the facts and tendencies of 
the forces at work, that wages are the index of productiveness, 
growing and declining together in all changes that occur to them. 
These conclusions I must leave with you for such investigation as 
you may be able to give them. 

D. The admitted inaccuracies of the census reports concerning 
the capital invested, the cost of materials, of labor, and the value 
of the products of our manufacturing industries, and the like errors 
in the department of agriculture, seem together to be so great that 
I wonder why Congress has persisted for about 40 years in requir- 
ing the assessments. 

T. These reports, notwithstanding their unfitness for the uses 
which I have designated, have a certain value and an important 
one. However inaccurate, they serve to indicate the rate of pro- 
gress made from time to time. The errors balance each other, and 
the sums are approximations to the truth. I have adduced their 
respective deficiencies to warn you against the averages and the 



MONEY. 115 

percentages which they are made to aflford ; and, by the way, let 
me say that the summarizings and clusterings of averages and per- 
centages are a common vice of the statistical renderings of particu- 
lars, and the conclusions drawn from them are almost always 
erroneous, and often fraudulent. You must use them, but, beware 
of them. One added to 2 is an increase of 50 per cent. ; 50 added 
to 100 is the same per cent., but a very different quantity. So 
the average of 1, 2, 3, 4, and 20 is 6. Here the most irregular 
of the numbers has the greatest effect upon the average, and 
really gives the most erroneous idea of the series. 



CHAPTER XI. 
MONEY. 

T, What is money ? 

P. Please don't ask me. It seems to be a muddle and a mys- 
tery. The prevalent discussions of the subject are another con- 
fusion of tongues. The common apprehension is, perhaps, only a 
definition of words, but not a logical description of the thing. It 
is vaguely called a medium of exchange — an equivalent and repre- 
sentative of the value of other things — a standard and an expression 
of value. The precious metals, which are " the money of the 
world," are held by some to be the only real money, and the true 
measure of all their substitutes and representatives ; calling the 
former coin, or metallic, and the other, credit money. Money 
taken in some of its forms has an intrinsic value, but in all its 
forms and uses it seems to serve as a counter or computer without 
any regard to its substance. Permit me to put your question to 
yourself — what is it ? 

T. Metallic money is no more the standard of values, no more 
their representative, no more real money, than many another 
commodity, nor than any of its substitutes in use. Coins are not 
even "the money of the world" in the sense of having a fixed and 
uniform exchange value everywhere ; the metals in them have a 



116 POLITICAL ECONOMY. 

market price where they are used, and that price is as changeful 
as that of" any other commodities. 

i\.s for the substances which rightfully take the name and serve 
the uses of money, some of them are and have been such as these : — 

Moses expressly calls slaves money. The Anglo-Saxons called 
slaves and cattle living money, to distinguish these mediums of 
purcliase and payment from the metals in use, which they called 
dead money. The American aborigines employed as a medium 
of exchange variously colored shells, which they called wampum. 
The native Africans, and some of the people of the Asiatic islands, . 
still use shells, which they call cowries. Cod-fish was, not long 
ago, the current money of New England ; and tobacco was that 
of Virginia. The ancient Romans expressed and exchanged values 
in cattle (from which Ave have our word pecuniary) ; and the 
Spartans at one time adopted iron as money. 

All these were as veritable money then and there as the precious 
metals have been, and are, elsewhere and at other times. So you 
see any commodity may be a medium of business exchanges, and 
is evidently valued at the cost of its production. This definition 
is, therefore, not a specific designation or description of the thing 
so named. 

P. Although money, whether " real " or representative, is 
nothing certain as to its substance, it is always a medium of ex- 
change, effecting indirectly what the primitive barter does in the 
commerce of property and services, and is always a standard of 
value. 

T. Money, consisting of, or representative of, any substance 
whatever, cannot be a standard of value, as weights and measures 
are of quantities and dimensions. Yard measures and pound weights 
are ever the same in length and gravity in the same latitude all 
round the earth. They are standards absolute. Gold and silver, 
so far from being standards for other things, do not even hold any 
fixed relative value to each other. Within a score of years gold 
has been in the money market as 15 1 to one, and again as 18 to 
one of silver by weight. Thirty years ago silver, in the London 
market, was worth 60 pence per ounce troy. Since that time it 
has been down to 48 pence, and is now (1880) at about 52 pence. 
lias gold risen, or has silver fallen, through this range of change 



MONEY. 117 

in price ? No matter now -which. Either or both of them, or any 
other thing may be a standard of payment of debts by the arbi- 
trary appointment of municipal law ; but this is a very different 
thing from a standard of exchange in property and services. The 
civil law must, of necessity, determine what thing, and how much 
of it, may be exacted from debtors, but cannot direct how much 
"of it shall be paid for a bushel of wheat or a yard of cloth. Bank 
of England notes in Great Britain, and greenbacks in the United 
States, are legal tenders under the law, and business people con- 
form to these arbitrary regulations of the currency ; nevertheless, 
the commercial value of the precious metals, coined and uncoined, 
is fixed by their cost of production at the time, and the varying 
demand for their use in the arts ; subject, also, to the influence of 
speculation incident to trade in them as commodities. The in- 
trinsic, or bullion value of coins, differs more or less from the 
nominal, at which they pass in trade by tale ; for, in all places 
other than in the respective countries that fix their weight, fine- 
ness, and names, they are matters of merchandise, and subject to 
all its fluctuations in prices. 

I). I have learned, in the course of our discussions, to avoid 
answering your question. What is money ? — expecting, at every 
turn, a cutting-up criticism of the opinions which I try to repre- 
sent. Yet I venture to express some surprise that you allow us 
no standard of exchange value, none by which to compute the 
worth of property, the growth of wealth, or of equivalents in the 
vast range of business transactions. 

T. Allow me, also, to be surprised that you imagine any such 
permanency of a standard of valuation in the exchanges of com- 
merce and trade. In essence and in action these exchanges are 
only modes of barter, for which there can be no standard, as there 
is no medium. Standard, forsooth ! Why, there is none for 
morals, for taste, for rights, or for duties, either permanent or 
universal among men, and, governing their relations or opinions. 
Social commerce is ruled by an ever-changing measure. In these 
exchanges there is nothing unchangeable, nothing absolute, or 
even perfectly known. They are all relative to conditions which 
are neither universally the same, nor constant in character any- 
where. It is enough that they are wisely adapted to the passing 



118 POLITICAL ECONOMY. 

time and its special circumstances. Two pence (estimated at about 
thirty cents of our money) was the amount of advance made by 
the srood Samaritan to the host for the entertainment of the sick 
and wounded man that fell among thieves ; and two hundred pence 
($30) was estimated by the Apostles as the probable cost of a 
dinner for 5,000 people in the desert of Judea. Try your money 
standard upon these instances ! ! Or, later, and much nearer our * 
own time, the average money price of horses in England, in the 
year 1696, was $12.92, in American gold of the year 1870. The 
horses now are something better for use and for style, but apply 
your exchange gauge to them now at say $25 each. You might 
as well measure a flying cloud on a windy day with an elastic 
string as estimate money values through the changes of time, 
place, and circumstances to which they are subject. 

P. Compared with other commodities, gold and silver have 
cheapened greatly in the lapse of generations, and they have con- 
siderably changed in relative value to each other and to the stand- 
ard by money of account or nominal value. 

T. In the year 1006 the Tower pound of silver was coined Into 
20 shillings (hence 20 shillings are still equal to jEl in computa- 
tion). These 20 shillings were equal in weight to 18| shillings 
of the Troy pound adopted in 1527. The Troy pound has since 
undergone three changes by coinage ; thus, in 1553, it was 
coined into 60 shillings ; in 1600, 62 shillings ; and, in 1816, 66 
shillings. So, in 800 years, you have the Troy pound weight of 
silver more than trebled in nominal value, — that is, if you had 
contracted a debt in 1066 of twenty shillings, you could pay it in 
1866 with less than one-third of the weight of silver intended by 
the bargain. 

P. The effect of this change in the nominal value of the metal 
is, that the burden of old debts, especially national debts, is 
lessened in the proportion that the medium of payment cheapens 
in labor-cost. There is blessing in that process. The increase of 
a nation's wealth, and of the reduced labor-cost of the money in 
which its debt must be paid must, in the progress of time, greatly 
lessen the burden of its debt. 

T. Yes ; more than you might think. The interest of the debt 
of Great Britain, for instance, was 10.21 per cent, of the annual 



MONEY. 119 

product of its industries in 1816 ; and, in the following 65 years, 
has fallen to 4.15 per cent. So you see that old debts like other 
things wear out as time progresses. They carry the same name- 
figures while they last, but they shrivel with age. Principal sums 
at interest have been supposed to burn on like the bush that Moses 
saw in the mount, burning without being consumed. That is a 
mistake. They were made by converting consumable things into 
money of account, but there is no necromancy in the transmigra- 
tion. They, also, are things that perish in the using. A man, 
by securing it for himself, expects to make a 5 per cent, investment 
exempt him and one successor from labor forever, because if 5 per 
cent, yields them a sufficient support, the principal has something 
of immortality that does not fail of a perpetual yield in the course 
of time ; but, if that nominal 5 per cent, declines, with the declining 
value of money, his successors will have to be something better 
than sleeping partners in the world's business. 

I). It results, then, in the economy of earthly affairs, that though 
interest eats like a canker it is itself eaten by its own rust. 

T. It means that the world's progress is not to be fossilized or 
crystallized for the benefit of its slow-goers and idlers. Money is 
a fruit of labor ; unused by the owner for the power of service in 
it, he must not complain if it withers in the presence of the ever- 
growing activity of live labor. 

P. The increase that has occurred in the production of the 
precious metals would throw some light upon their change of 
value, for of course the more abundant the supply of any com- 
modity the cheaper it is. 

T. Stop there. It is not simply abundance of things, having 
intrinsic value, that affects their market price. It is the labor- 
cost of production that rules their exchange value. Abundance 
and scarcity of supply are only the indications of the variance of 
labor-cost. 

With respect to the yield of the mines, it will serve some pur- 
pose to look at the reports and estimates of the accepted author- 
ities. 

It is believed that in 350 years (from A. D. 1500 to 1849) the 
product of silver amounted to 6625 millions of dollars, and of gold 
3100 millions, the relative value being taken at 15 J to 1 by weight. 



120 POLITICAL ECONOMY. 

Starting with the discoveries in California and Australia, it is 
estimated that from 1849 to 1873, there were added to the product 
of silver 1550 millions, and of gold 3350 millions. To resort to 
better ascertained and more accurately reported increase during 
the latter period would not help us to more definite data, for that 
would only be comparing a tolerably accurate report with an esti- 
mate that is merely conjectural. These statements give us an 
annual average product of silver 19 millions, of gold 9 millions 
in the 350-year period ; and for the later period of 24 years 65 
millions in silver and 140 millions in gold, per annum. These 
reports well enough indicate the vast increase in production now 
going on. It shows an aggregate for the recent movement of 205 
as against 28 in earlier times. 

Humboldt, writing before the California era, estimated the 
metallic money circulating in Europe at more than 30 times 
greater in the 18th than in the 15th century. And he put the 
annual importation from America into Europe from A. D. 1492 to 
1500 at only $250,000 yearly ; but from the year 1750 to 1810 
it had grown to $39,900,000. 

The production of the mines of the world is greatly variant 
from year to year ; and the relative exchange value of gold and 
silver increases the variance of price. Remember this in all your 
calculations. 

It is estimated by some writers that three-fourths of the gold 
produced is used for coinage, and one-fourth in the arts. The 
guesses made at the like uses of silver are scarcely worthy of 
notice. 

The Director of the United States Mint in 1879 thinks that one- 
half of the gold and one-third of the silver annually produced from 
the mines, is consumed in the arts and manufactures. 



FUNCTIONS OP MONEY. 121 

CHAPTER XII. 

FUNCTIONS OF MONEY. 

T. Let us now turn to the functions and the forms of money. 
In its offices it is to be regarded under two distinct aspects : — As 
an Exchanger of values, and as capital, or a Producer of values. 
Money, used to represent the value of other things in exchange, is 
to be considered merely as counters, computers, or numerals ; but, 
acting as capital, it is a producer of values as any other commodity 
is. In the former office it is described by Adam Smith as " dead 
capital." As an exchanger it is a transporter of property ; as 
capital it is a producer. In either case it is not dead or inactive. 

D. yV^hen a mill, a plough, or a dollar is idle or unemployed, 
may it not be called dead to all intents and purposes ? 

T. Smith speaks of money in use — his phrase is dead Capital. 
A true definition of death is the state of being incapable of action — 
" there is no work or device in the grave." False and defective 
definitions are full of mischief. 

As a medium of exchange money is an agent, not a subject. Its 
agency intervenes in commerce just as labor-saving machinery is 
employed in the production and transportation of commodities, and 
under the same necessity. Change of form, including properties 
and of place, is all the power that man has over matter. Time and 
space are overcome in changes of ownership by the use of money. 
In the existing conditions of society traffickers cannot meet as in 
other times, to exchange their surplus of productions. If some 
representative of values, capable of fitting itself in amounts to all 
desired exchanges, and always commanding them, could be found, 
the aims and uses of commerce would be accomplished by such an 
instrument ; and it would be at once an instrument of barter in 
things and of association in the community of the dealers. This 
predicament suggests the familiar medium called Money ; money 
in all its kinds, serving in the same uses ; Coined metals, substi- 
tute and representative paper — Money of account — Credit money 
of all kinds, each answering in its turn better than any othei- iu. 
circumstances specially adapted to its use. 
9 



122 POLITICAL ECONOMY. 

D. Then you call the instruments in use, whether they have an 
intrinsic, or only a conventional value ; whether of gold, shells, 
circulating notes, drafts or any other evidence of debt payable 
which is suitable for negotiation, money. 

T. I use the generic term for all kinds, and add specific desig- 
nations when I have occasion to distinguish the substances of 
which the}'- sevenilly consist. In all uses of the word, with or 
without specific prefixes, I am justified by the axiom that things 
Avhich are equal to the same thing are equal to each other. De- 
scribing things by their kinds and differences is not a false or 
doubtful theorizing, nor a begging of the question in any dispute 
about them. 

P. Among the things used to represent values of other things, 
gold and silver have long held the precedence. Is there anything 
of foreordination in this preference, and in the rank commonly 
accorded to them ? 

T. No; their adoption is due to their fitness, and their use 
is prescribed by such fitness; when they shall fail, and as they 
shall lose adaptation to their use, they will and must lose the 
rank which they cannot fill. Some of their qualities are specially 
adapted to social conditions, which more or less lack business or- 
ganization, and where credit is incompletely established. Their 
use in such primitive states of society, Avhile it relieves some of 
the burdens of simple barter, or hand-to-hand exchanges, still 
preserves its spirit. No trust, no postponement of payment, no 
credit that can serve as capital. They are the commerce of sav- 
ages, and its chief instrument in barbarism. 

P. But they maintain, to a great extent, a high estimation in 
civilization. To what qualities are they indebted for such emi- 
nence among the mediums of business transfers of property ? 

T. 1st. They have a certain approach to constancy of value, 
because the cost of their production does not vary much within 
the periods that private contracts for payment usually run, or 
changes of prices usually occur. 

2d. They have an intrinsic value. They are not of question- 
able solvency. They are the medium of international trade, that 
is, of paying its balances, and are not subject to depreciation ex- 
cept from natural causes. As there is no faith in their use, so 
there is no liability to its violation. 



FUNCTIONS OF MONEY. 123 

3fL Their scarcity and high cost of production have the effect of 
compacting large value in small bulk and light weight, as com- 
pared with other substances which have value in themselves. 
Precious stones, indeed, greatly excel them in these respects, but 
in others they are altogether unfit for currency. Their capabil- 
ity of storage and concealment are advantages added to their port- 
ableness, though they are in large amounts almost unmanageable. 

4th. They are very durable, losing nothing by rust, fire, or 
water. They waste by abrasion, and have been known to lose as 
much as ten per cent, of their substance while yet in circulation, 
but they are in a good degree defensible by alloys of cheaper and 
more durable metals. They are liable, besides, to the frauds of 
counterfeiting, clipping, sweating, and punching. To some of 
these risks they are quite as much or even more exposed than are 
the ordinary forms of credit money. The balance of security, 
however, is in their favor. 

.5th. Their very best and most indispensable quality is in their 
divisibility into very small portions, and their capability of restor- 
ation into larger ones, with scarcely any appreciable loss. The 
real service of money in all forms and amounts, resting in its con- 
venience, the eminent divisibility of the precious metals is their 
chief recommendation for service. This point is made impress- 
ively clear when small coins are withdrawn from circulation in a 
suspension of specie payments. The lack of five and ten cent 
pieces is a greater inconvenience than the absence of five and ten 
dollar pieces, or bank notes. Banker's checks or drafts can be 
made to answer in payment of large sums, but we have .seen the 
community driven to the use of postage stamps and horn tokens 
upon street-cars, and for small purchases. With a three cent piece 
Ave buy an infinitesimal portion of the labors of hundreds of heads 
and hands employed in the production of the daily newspaper. 
The fractional currency enables us to avail ourselves of the sup- 
plies of our daily and hourly wants. In this service coins have 
an indispensable office. They hold their place in this most useful 
though less honored work. They are fast being displaced in the 
wholesale and larger retail business of the time. The rule of fit- 
ness or convenience governs in the choice of instruments in com- 
merce, as in all other things. 



124 , POLITICAL ECONOMY. 

CHAPTER XIII. 

MONEY AND PRICES, ' 

P. Does, and how does, the quantity of money in circulation 
affect the prices of other things, — in an arithmetical or other cal- 
culahlc proportion ? In this question lies the trouhle that theorists 
are usually engaged with. • 

D. If the laws of trade maintain equivalence of value hetween 
commodities and services, and the money by which they are esti- 
mated, and which is exchanged for them, the one must equalize the 
other, or "supply and demand" mean nothing operative upon 
prices. 

T. But how would it be if the money in use, of whatever kind 
or kinds it may consist, is at no time a representative of the mass 
of values in the commodities and services in business exchanges ? 
Would, then, the greater or less quantity of the medium, as it is 
called, of itself determine the exchange value of everything in 
market ? Money is called a mystery, so much so that none but 
the least skilled in its laws assume to know all about it. And a 
great deal of mystery is added to the subject by the " ready-made- 
easy" method of settling its theory. 

For example : It is held that the total amount of money in cir- 
culation represents the total value of all the property bought and 
sold. This affirmed equivalence, however, is not proved, but is 
absolutely disproved. 

David Hume, following Montesquieu, 80 years ago, produced 
this thoughtless assumption ; and, among others, John Stuart Mill 
adopted it in the last edition of his work on Political Economy. 
Mill says : " The doubling of the money in use would do no good 
to any one ; would make no difference, except having to reckon 
pounds, shillings, and pence in greater numbers. It would be an 
Increase of values only as estimated in money;" and he goes on to 
say that, " if the whole money in circulation was doubled, prices 
would be doubled. If it Avas only increased one-fourth, prices 
would rise one-fourth." 



MONEY AND PRICES. 125 

D. If this be an utterly vmtenable opinion, it is not a little 
strange that such men as Montesquieu, Hume, and Mill should 
make the same blunder. 

T. Hume and Mill both did know ; and elsewhere, when treat- 
ing of the relation of supply and demand, explicitly contradict it 
in respect to money. They adopted the notion that money is a ' 
measure of value, and forgot that, as an exchanger, it does not lose 
the character of being itself a commodity, subject to the law of 
labor-cost. With them it was an abstraction, an idea, as weights 
and measures are, and they did not advert to the fact that pound- 
weights and yard-sticks do not enter into the transfers of things 
which they measure and express, while money is one of the' things 
exchanged. Hume does not correct his misjudgraent in this mat- 
ter, but he abandons and contradicts its doctrine, and becomes 
eloquent in stating the changes which an increased influx of this 
supposed mere counter of other things effects upon the activities 
of business. He perceives that it is no longer a fixed equivalent 
under all differences of its amount, but becomes a wonder-making 
stimulus to industry and commerce. In the same essay he says, 
" when money flows into a country, everything takes a new 
face, and labor and industry gain life ;" that " it is easy to trace 
the money in its progress through the Commonwealth, when we 
shall find that it first quickens the diligence of every individual 
before it increases the price of labor ;" and, again, he assures us 
that, when money decreases, the people suffer, and " poverty, 
beggary, and sloth ensue." Nevertheless he affirms that "the 
quantity of gold and silver is in itself altogether indifferent" ! ! ! 

Mr. Mill, discussing the effects of excess and deficiency in sup- 
ply of other things, knows very well that gluts do not proceed in 
cheapening, nor deficiencies in enhancing, prices in arithmetical 
proportion. He is made aware that a ten per cent, deficiency in 
the supply of wheat raises its price, not ten, but thirty per cent. ; 
and that, falling to one-half or fifty per cent., the price will go up 
to an advance of 450 per cent. Yet, when he is talking about 
money, he makes it go like clockwork over equal spaces in equal 
times upon the dial-plate of the market rates ! 

B. I wish I could understand how you understand the law of 



126 POLITICAL ECONOMY. 

supply and demand in its application to prices, for it certainly has 
some force. 

T. Doubtless. Esau sold his birthright for a mess of pottage. 
His need had a life and death urgency. I do not deny even so 
wide a range of operation as this in the pressure of conditions 
upon prices. But I do not admit that things stand still to be com- 
pared, computed, or valued against the assumed money counter- 
poise. There is set-off, effecting a hundred-fold more exchanges 
than employ anything that can be found in the money supply, 
such as drafts, bills of exchange, and mutual debt settlements. In 
the clearing-house of the London banks the balances do not ex- 
ceed five per cent. ; and these insignificant balances, though pay- 
able, are not actually paid in money of any kind. An eminent 
banker of the same city, with operations extending to millions of 
pounds sterling, shows that less than three per cent, of these im- 
miense sums employs coined cash, and not more than five per cent. 
of bank paper. (See Appendix A.) 

Furthermore, the gold, silver, and paper money of no country 
in the civilized world approaches- the values exchanged in its 
markets. Our money of all kinds, never before the great Rebel- 
lion, reached beyond 400 millions of dollars, and a considerable 
part of this amount was not in active use at any time. Probably, 
if the reserves in banks and in private hands were subtracted, not 
more than 300 millions would be left upon the business market. 
But the annual products of industry were worth at least 4000 
millions, of which, if only three-fourths were bought and sold, and 
another thousand millions' worth of real estate changed ownership 
by bargain and sale ; and still another thousand millions were paid 
for professional, educational, personal, and artistic services, we 
have 5000 millions to be paid and received by means of 300 mil- 
lions of money, or by one dollar for 16| times as much in ex- 
change values. Thus the see-saw equivalence between money and 
property on sale is as absurd in theory as impossible in fact. 

D. You have counted the money only once in bulk, but one 
piece of money serves in many payments, and is thus multiplied in 
work, perhaps, on the average, 16f times. 

T. I have also valued the commodities and services in the total. 
These pass just as often as they are sold and paid for, as the 



MONEY AND PRICES. 127 

money does, which keeps their exchanges even in numloer and 
values. 

D. Excuse my dulness of apprehension. It seems to me that 
you divide the cash paid in cash sales into the total of the cash 
and credit sales. 

T. Which shows that the cash employed is only equal to some- 
thing less than one-sixteenth of the prices to be met, and must have 
just that much less than the ruling power ascribed to it by the 
authorities quoted over all prices, as they affirm. So far as it is a 
medium of payment it can operate only upon the prices of things 
which it exchanges, and can have no eftect whatever upon those 
in which it has no agency. 

Let me now call your attention to the causes of fluctuation in 
prices, which act independently of the money supply: Miscalcula- 
tions of dealers as to existing and prospective supply and demand ; 
influence of seasons vipon agricultural productions; proj)hecies 
concerning the coming harvests ; changes of taste and fashion ; 
legislative enactments in the matter of domestic taxation and import 
duties; political events with their effect upon trade ; excitement 
or depression in the condition of other countries connected with us 
by an active trading intercourse ; profusion in good times and con- 
tracted indulgences of consumers, when rigid economy is compelled; 
speculation in the markets, which never allows prices a rest at 
their natural rates. These, and a multitude of such influences of 
the passions of men are constantly in play upon things in possession. 
To them must be added the disturbing agency of the producing 
industries, such as new and cheaper means of manufacture ; cheap- 
ening efi"ects of substitutes ; larger or smaller products from the 
mines, soils, and waters; cheaper transportation; new or enlarged 
markets opened abroad — all of which are ordinary events. The 
occasional, are wars either at home or abroad, with their blockades 
and embargoes. 

Will any one, who comprehends in any tolerable degree the force 
of these operative causes, undertake to measure their activity and 
various degrees of intensity, so as to say that he can duly value 
the whole of them or any of them ? Especially will he, in the face 
of this complex array, credit the money in use with an overruling 
and exclusive control ? As well might the problems of astronomy 



128 POLITICAL ECONOMV 



n 



be solved by the state of the weather, as those of prices in trade by 
the quantity of active currency, or the state of the money at com- 
mand by the ever-changing market rates. 

P. We are familiar with the effect of monopolies, such as that 
of the French government in the tobacco trade, a mode of taxation 
upon consumption which enormously enhances its price in France, 
and greatly reduces it to the American producer. The high tariff 
rate upon it in England has the like effects, which in neither case 
depends upon the stock of money in either of the countries engaged 
in the trade ; and, it appears to me, clearly , that things and move- 
ments so largely governed by opinions, passions, hopes, fears, and 
the casual necessities of life, cannot fall within the rules of arith- 
metic, or of comprehension, or prediction, as the business affairs 
of beavers and bees probably are to them. The doctrine of an 
exact equivalence and counterpoise of money and trade values is 
as symmetrical as logic can make it, but it bears no relation to the 
facts which it is thought to embrace and explain. 

D. When people think of prices, is not the medium, the currency, 
in wiiich they are expressed, constructively present ; and if so, is not 
the stock or fund of money potentially involved and opej-ative in 
the valuation? 

T. No. When skins are exchanged for fish in simple barter 
among savages, they are not valued by a substantive standard. 
Their worth is ideal, and is so compared. In civilization men think 
only of the relations of worth between the things exchanged, bought, 
and sold. If they mentally compute the respective values by dol- 
lars, or weights, or measures — they no more think of the number 
of dollars in the market than of the number of poumi-weights or 
yard-sticks which dealers employ. If it be dollars they are buy- 
ing, they, also, are ideal values of the uses they may serve, which 
have no standard of purchasing power over other things. Goods 
are not valued by the ships and wagons that transport them. These 
are mediums of transportation, and so is money. It serves in cal- 
culations as the numerals one, two, three, or inches, yards, and 
tons do in measuring quantities. It is an instrument, not a subject 
of exchanges ; for, in its condition of money, it is only a sign, a 
token, an algebraic symbol, and has no other use or office in the 
transaction. It is another kind of money — money of account that 



MONEY AND PRICES. 129 

mediates effectively in contracts — a money that is embodied in 
inscriptions upon paper in debits and credits ; and the money of 
currency is the representative of as much of this money of account 
as it covers, and its function as a representative of money of account 
is that of a conveyor of property, nothing else. If business were 
perfectly organized, no more currency could be required than 
enough for the settlement of balances, say, if you please, 10 per 
cent., if that be the average amount of profit, and so would not be 
anything like the measure or the equivalent of values in exchange. 
As affairs are now conducted money of all kinds, usually meant by 
the word coin and credit money, does not exceed 10 per cent, of 
the" property and services transferred, 

D. Your theory seems to me so metaphysical that I do not 
readily grasp it, and it, therefore, hardly describes the mental 
process of the incurious and unskilled in matters psychological. 

T. The most common understandings and most ordinary mental 
methods are as far above the range of matter of fact as are those of 
philosophers. Their eyesight does not limit their mental vision 
any more than it does yours or mine. Their reveries and reflec- 
tions are as remote from the material things which are the subjects 
of their thoughts. There is an efficient metaphysics in all men's 
thoughts that is not counted upon in the philosophy of cipherers. 

P. Our difficulty of apprehension and hesitation in the accept- 
ance of your prelections occasion diversions in these discussions. 
Breaking away from these interruptions, let us have the promised 
testimony of the experts who are deemed to be safe guides in our 
inquiries. 

T. Any tolerable approach to an adequate presentment of the life- 
time labors of William Jacobs, Arthur Young, Thomas Tooke, and 
Stephen Colwell, within our little compass of limits, would be like 
the compression of the globe into the dimensions of a nutshell. I 
prefer to give the summary results of their labors, w^hich must 
answer our purpose, as it is stated by Mr. Colwell (Ways and Means 
of Payment, p. 565) : " The average prices of the 16th century 
were only an advance of 24 per cent, over those of the 15th, whilst an 
addition of 380 per cent, had been made to the stock of the precious 
metals ; the average prices of the 17th century were advanced 80 
per cent, over those of the 16th, and the addition to the stock of 



180 POLITICAL ECONOMY. 

tlic precious metals Avas 875 per cent. ; the average prices of the 
18th century over those of the 17th were an advance of 11 per 
cent., and the a(hUtion to the stock of the precious metals 1120 per 
cent. To make the case more striking, the prices of the 18th 
century over those of tlie ir)th were an advance of 108 per cent., 
whilst the addition to the stock of the precious metals in tiie three 
centuries had been 1120 per cent. It is to be noticed that the 
average prices of the 17th century over those of the lilth, which 
covered a period before the use of paper currency, exhibit an 
advance of 111 per cent., whilst the average prices of the 18th 
century, in which there was a great use of paper currency, 
besides the immense increase of the precious metals (1120' per 
cent.), j)resent an increase over the 17th of only 11 per cent." 

According to the investigations of Young and Jacobs, prices 
advanced from the ir)th to the end of the 18th century 2^ times, 
and the precious metals (i-J times. 

P. What think you of these reports or estimates? 

T. I believe that the researches of Arthur Young are as good, 
and certainly as faithfully made, as the nature of his subject — 
prices — admits. Of Jacobs, on the production and employment 
of the precious metals as money, I must say, Avith J. R. McCul- 
locli, that it is the best yet produced, but still defective, and so 
far erroneous. There is no practical means of counting or calcu- 
lating the coin in use at any time. Moreover, with respect to the 
prices by Young, it is to be observed that they are necessarily 
averages of sums widely variant in labor wages. For instance, in 
the north and south, and again in the east and west of England, 
they range considerably even in adjoining counties, and at ditler- 
ent distances from London ; and in all districts they vary much 
for the summer and winter months, and the tables given are, 
therefore, only averages of averages. 

Besides, however nearly Young's items may approximate the 
actual rates, the estimated results used in comparison of the dif- 
ferent centuries given in his tables, the items arc not identical. 
They are the prices of somewhat unlike commodities ; thus, 
horses, coals, provisions, etc., afe given for some of the centuries, 
but not for all of them. But what is to be done by ciphering 



MONEY AND PRICES. 131 

among cipherings, and among difficulties such as are inseparable 
from such explorations as these ? 

P. Is there nothing more exact and more reliable in any of 
the authorities than in those which you have cited ? 

T. Thomas Tooke, author of the history of prices and of the 
state of the circulation, from 1793 to 1857, in six octavo volumes, 
of whose works Mr. Colwell, one of the most competent reviewers, 
and himself one of the best authorities, says : " It has no equal 
in any department of political economy for indefatigable research, 
for patient analysis, for the extent and variety of facts on which 
its conclusions are based, for fulness of illustration, and for lucid 
arrangement." Mr. Cohvell adds that he is " not aware that any 
respectable attempt had been made to refute its conclusions or to 
weaken its authority, although its main object and undeniable 
result has been to contradict many cherished positions of leading 
economists and theorists of the present and past generations." In 
an examination and severe cross-examination before a committee of 
the House of Commons in 1832, and in a discussion pressed upon 
him by well-prepared opponents, he forced the conclusion that 
" the details given by him were accurate as to time, and as nearly 
as possible accurate as to amounts." 

The testimony of Mr. Tooke, so qualified to speak, is in his own 
words; speaking of the great fluctuation of prices which took place 
between 1792 and 1858 (66 years), which were the greatest that 
have ever occurred in the history of commerce and trade, he says: 
"The alteration of prices originated, and mainly proceeded from 
alterations in circumstances distinctly aifecting the commodities, 
and not in the quantity of money." He, therefore, condemns as 
wholly erroneous a resort to the state of the currency for a solu- 
tion of the phenomena of prices. He does not deny that an in- 
crease of money may have^ in special instances, a tendency to 
enhance prices, or, that all other things being equal, it would not 
in all instances have that tendency ; but he holds that the quantity 
of the currency is not in itself, a regulator of prices, these being 
mainly determined by facts and circumstances peculiar to the com- 
modities so aflFected : and that these circumstances do frequently 
operate with such force as to reduce prices in the face of an ex- 



132 POLITICAL ECONOMY. 

pandiiij; currency. In point of fact the expansion of the currency 
is fnMpiently the efl'oct, and not the cause of enhancing prices. 

7'. Have you anythinj^ nearer home, and more recent in the 
relative changes of prices and quantity of the currency which 
bears directly on the question at issue ? 

T. I have selected from a treasury report of 1803, twenty 
staple articles, which was a selection from sixty representative 
articles in the New York price lists. An examination of the 
prices of these sixty articles on the 1st of May, 1855, and of 1860, 
shows a decrease in thirty-five of them, ranging from 44 to 12 per 
cent. Several others of the remaining twenty-five showed a 
slight decline, or stood at the same price at both dates. None 
but molasses, sugar, window-glass, wool, Liverpool salt, coifee, and 
cotton had risen, and they but little. 

During tiie period of this great decline of prices, the bank note 
circulation increased from 187 to 207 millions (ecpial to 10.7 per 
cent.) ; the bank deposits, which arc also currency, increased from 
l*.K){\y to 258y'*j millions of dollars, equal to 33.3 per cent., to- 
gether increasing the effective fund for commercial use 22 per 
cent, in that five years ; to which must be added, according to the 
theory of money equivalence, all the gold and silver thrown in the 
interval into the channels of trade, which could not be less than 
65 per cent, (the increase in the coins in the banks w'as 55 per 
cent.V Tutting these money funds together — bank notes, depos- 
its, and specie, we have a purchasing stock of 544^ millions in 
1860, against 4oly'^^ millions in 1855 — an increase of 26^ per 
cent, against a deer earn in prices ranging from 44 down to 12 per 
cent, in the chief staple articles on the market. 

P . The decline of prices in face of the increase of money is 
very great. Might I guess that this decline was as much as 25 
per cent. ? 

T. You may guess, but you cannot calculate or count the ag- 
gregate average, unless you had the quantities of each article 
sold in 1855 and 1860; and these quantities cannot by any means 
be ascertained of sixty staples, with many of them in half a dozen 
forms; but the exliibit certainly shows a great decline of prices 
under a great increase of purchasing funds. 



MONEY AND PRICES. 133 

B. Prices certainly rose after the discovery of the mines of 
California and Australia, between 1850 and 1860. 

T. And fell again as much after the effect of the influx of coin 
and the speculation attending it in the period 1850-55. Even 
while ten of the articles given in the treasury report rose consid- 
erably between 1850 and 1855, seven others of them decreased 
very greatly ; and while eleven articles decreased in price between 
1855 and 1860, six went down from two to tAventy-three per cent. 
under the like influence of the currency, if it had such influence. 
These facts plainly sustain Tooke's conclusion that the state of the 
currency is not the regulator of prices, and that these are mainly 
determined by facts and circumstances peculiar to the commodities 
themselves. 

P. Oh, bother the statistics. Did not my father pay twentv- 
five cents for a yard of muslin, which I can buy for a quarter of 
the sum ? Didn't he pay a dollar or two for a crayon portrait, 
and I can get a better photograph for twenty-five cents; because, 
forsooth, money is four times as plenty now ; but in spite of that 
plenty, I must pay four times as much for a day's labor as he did 
fifty years ago. What nonsense is this money measure of com- 
modity values ! 

T. Keep your temper, my boy, and don't treat fools as they 
deserve. If you ever get into the discussion you will have Mon- 
tesquieu, Hume, and Mill put at you as gravely, solemnly, and 
seriously as if their logic meant something. Don't you know that 
the Aristotelian syllogism proves that you are a goose ? 

P. But I don't feel the feathers, and I have not the web-feet 
to waddle on the land or swim in the water. 

T. Then you don't feel the force of the logic that begs the pre- 
mises and forces the conclusion, and lets the facts take care of 
themselves, if they can. 

D. That really sounds like profanity. The Jews held it to be 
blasphemy to speak against Moses. How did Montesquieu expose 
himself to such severity of criticism ? 

T. Hear him as he committed himself in his " Spirit of Laws," 
book xxii., chapter vii. There he says: "If Ave compare the 
mass of gold and silver in the world with the whole of the 
commodities, it is certain that every commodity in particular 



134 poLrxrcAL economy. 

may be compared with a certain portion of the entire mass of 
gold and silver. As the whole of the one is to the Avhole of the 
other, a portion of one will be to a portion of the other. Prices 
are fixed at a rate compounded of the Avhole of the commodities 
with the whole of the signs, and that of the whole of the commo- 
dities in the channels of trade with the whole of the signs (gold 
and silver) employed as money. The establishment of prices 
depends always fundamentally upon the proportion of the total of 
the commodities to the total of the signs." There, now, did you 
ever see the premises more boldly begged than in this syllogism ? 

P. I think we have enough of these theorists, and, excuse me, 
more than enough of the counter-argument. 

T. We shall have to encounter them again and again, for we 
have not yet considered the subject of credit-money, and the 
functions and policy of banks and institutions that issue it. 

P. By the way, there intrudes just here, I think, the subject 
of mono-metallic and bi-metallic currency, or money. Are you 
disposed to take it up ? 

T. It is in place now to consider it, which we must do very 
briefly. 



CHAPTER XIV. 
STANDARDS— GOLD OR SILVER, OR BOTH. 

T. Our inquiries are not a circular hunt in statistics. We are 
not making invoices of an itemized arithmetical toy-shop. We 
must use numbers in the expression of quantities, but the facts 
which we hunt for among figures are only those which tend to 
make evident the truths that rule in affairs. I wish I had the 
skill to array those which I must use in efficient forms. Every- 
thing of use in them depends upon the way in which they are 
mustered, and the accuracy of their aim in the conflicts of 
opinion. I am as weary of their employment as a schoolboy is 
of grammar on the eve of a holiday. The question of a mone- 
tary standard in the precious metals, and especially in the disputes 
about it, cannot be settled without a reference to the quantities 
and conventional values of the metals in use. 



STANDARDS — GOLD OR SILVER, OR BOTH. 135 

P. I should like you to take the directest route to the Q. E. D. 
of the problem, and in its light see the proofs and the objections 
that must otherwise obstruct a first view of the subject. 

T. You want an abstract of the general principles that settle 
the conclusions first, and, if need be, an exploration of data and 
details afterwards. Let us try that method and see what will 
come of it. 

D. Does not the inquiry turn upon the policy of a fixed or 
arbitrary standard of values in commerce ? And have not eaeh 
of the two precious metals answered the need, sometimes jointly 
and sometimes exclusively ? And is not the adoption of either or 
both a matter of convention, custom, or law, and is it not so set- 
tled without the use of tally-sticks in the discussion ? 

T. You are getting into danger — the danger of admitting that 
the true money is the ideal, or money of account, which has no 
material substratum ; in efi'ect, you are perhaps unintentionally 
avowing the doctrine of fiat money, and building an arbitrary 
money standard upon nothing tangible, by legislative arrogance. 
Indeed, legal tender has something of this in its assumptions. 

This doctrine applies only to a standard without a substance 
supporting it, and not at all to things having in themselves a com- 
mercial value. The bullion of coin has an exchange value, and 
its price is determined by the labor-cost of its production, and to 
Avhatever accidents it is subject in common with other commodi- 
ties of the market. 

P. NoAV I understand that lawful money, whether of metal or 
of paper, is only a standard in payment of subsisting debts, and 
is not a standard of prices in contracts. 

T. The bullion in coins of the same substance, whether of sold 
or silver, varies in cost of production, and, therefore, in market 
price, and obviously the coins, or the bullion in them, bear no 
constant proportion to each other, which consideration disposes of 
the question of bi-metallism conclusively on the ground of natural 
value. 

P. Is there so much variance in the prices of the two metals 
as greatly affects their equivalence ? 

T. Isabella of Spain, in 1497, fixed the ratio of silver to gold 
at lOf to 1 ; Elizabeth of England, in 1560, put it at 11 to 1 ; 



136 POLITICAL ECONOMY. 

France, in 1785, determined the ratio at 15| to 1 ; and the United 
States raised it to 16 to 1 in 18b4. But the market prices at 
London were, in 1870, 60| pence in gohi for an ounce troy of 
silver, and in 1878 50| pence. It has fallen Avithin eight years 
to 49| pence, and during the last year (1879) it has ranged from 
52 to 53 pence. 

Now, did gold rise in exchange value, or did silver depreciate ? 
or did the one rise somewhat and the other fall to make the dif- 
ference ? And in either case, what becomes of your standard ? 

But we have another trouble to meet. The director of the mint 
says that as prices have not advanced above those of 50 years ago 
the annual supply of the precious metals, although increased five- 
fold, is not excessive, nor more than sufficient to satisfy the 
world's present needs for coinage and manufactures, and has not 
inflated prices by depreciating money. And the London Econo- 
mist believes that the great increase of the gold production has 
not more than met the vast increase of commerce Avhich it stimu- 
lated in the last thirty years. Do you perceive how little the fig- 
ures of quantities and conventional values help us in establishing 
the ratios? 

D. Then, after all, there is something of the ideal even in the 
accepted exchange value of hard, substantial money. 

T. Settle that question as you may, the ever-varying price of 
gold and silver is conclusive that they do not so accord tliat they 
can be, either separately or together, one and the like standard 
or unit of estimation in the exchanges of trade. 

P. The principle or policy of legislative rule in the legal staml- 
ard of money has been extended to other commodities ; as in 
England, where the wages of labor were fixed by Parliament at 
certain rates ; and by other governments, in limiting the price of 
])rovisions in times of scarcity. Even some of the States, during 
our revolution in the last century, prescribed punishment for 
venders of goods charged at higher rates for Continental money 
than for payment in gold and silver ; and the Sumptuary laws of 
England, intended to restrain expensivencss in the cost of living, 
or to compel the use .of commodities of home production, had 
in them something of the principle on which legal tender is 
grounded. 



STANDARDS — GOLD OR SILVER, OR BOTH. 137 

T. The most of these legislative interferences in exchange values 
have been abolished for their weakness and unprofitableness, ex- 
cept in the matter of the payment of debts, where a restraining 
provision is necessary to prevent oppression by creditors. Legal 
tender has this use and office, but it cannot aifect values in pur- 
chases and sales, except to some extent indirectly. Thus the 
trade dollar, which has in it 7J grains more silver than the stand- 
ard dollar of the Mint, has yet fallen to a discount, because not 
received at its intrinsic value at the Treasury, or made lawful in 
the payment of debt. 

P. How does quantity of these metals thrown upon the market 
affect their relative values 1 

T. Not so much as the pet doctrine of supply and demand 
would lead you to infer. The Director of the Mint adopts the 
estimate of the production made by a famous German statistician, 
thus : — 

The world's production of silver in the 24 years, 1849 to 1873, 
valued at 15| to 1 of gold, amounted to 3 If per cent, of the total, 
and of the gold to 68f . But the annual supply of gold in the 
three countries which produce four-fifths of the world's supply 
(United States, Australia, and Kussia), reached its maximum in 
the year 1856. The total of that year was 134 millions of dollars ; 
in 1876 it was 90 millions ; in 1878, 99 millions, and in 1879, 87 
millions. But of late years the production of silver, which was 
less than one-half of that of gold, in the 14 years ending in 1873, 
has by the decline of the gold yield and the increase of the silver, 
approximated very nearly to that of gold, measured as 15J to 1. 
In the 6 years 1874-1879 the gold from our United States mines 
aggregates 244 millions, and the silver nearly 234 millions, and 
the Director estimates the yield of silver for 1879 (included in the 
6 year period) at an excess of two millions over that of gold. 
Putting the price of market commodities in 1870 at $1.00, he 
states that in gold they have declined to 86y'q- cents, and have 
risen (in 1879) in silver to $1.03, with fluctuations in the inter- 
mediate years. 

Here there seems to be some effect of quantity upon exchange 
value, as it appears also in the fact that our standard dollar sells 
now at about 88 cents in gold value in London. Legal tender in 
10 



138 POLITICAL ECONOMY. 

the United States interferes with the natural equation of prices, 
as the wages of society do in Europe and Asia, so that no one 
can tell the exact effect of quantity upon market prices. But all 
the facts show the impossibility of equating silver and gold money 
b}' convention or arbitration. Just as long as things of unlike 
labor-cost, and the resulting unlike market price, are made subject 
to an endeavor at equilibrium in any ratio of weights or quantity, 
the impracticability of the effort clings to, and must defeat it. 

I). The necessity or the convenience of a metallic medium of 
exchange, which does not depend upon the good faith or the sol- 
vency of the issuing party, as all credit money does, obliges you 
to be a mono-metalist. Do you adopt gold, as England has done 
during the greater part of the present century, or silver, as the 
East Indies have had it, time out of mind ? 

T. England chooses gold as a preferred metallic currency, be- 
cause, being about fifteen times lighter at the usual commercial 
value, it serves so much the better, wdien it must be used, for her 
" immensely large requirement of coin. India has not an equal 
necessity for great values in little bulk to cover the demands of her 
trade with foreign nations ; that is, she requires so much less of 
the money of the world in either kind, that with other reasons 
she can manage with the weightier metals. She, however, has 
suffered terribly within the last two or three years by the deprecia- 
tion of silver in the markets of foreign nations. But, to the other 
point involved in your question — I answer that neither England 
nor India is so far in similar conditions with the United States in 
respect to monetary affairs, that either of their usages indicates 
the best policy for us. 

D. Would not general commerce be as much benefited by a 
uniform standard of money values in all countries, as by the 
adoption of corresponding weights and measures in merchandise ? 

Congresses have assembled, and experts, statesmen, and jour- 
nalists, are in a persevering endeavor to induce and arrange a con- 
formity of the commercial nations by the establishment of a common 
standard of the coins in use. 

T. Merchants are a universal commonwealth, they are not pa- 
triots ; they are cosmopolitans, and theorists are their oracles. 
Accordingly their conventions come to nothing. The Latin nations 



STANDARDS — GOLD OR SILVER, OR BOTH. 139 

have only gone so far in equipoising the metals as restricting, but 
at the same time allowing, themselves to coin and circulate a certain 
quantity of silver coins at their nominal value. That amounts to 
a surrender of the question to settlement by the usages of each 
people. They have done nothing, and can do nothing, to fix a 
determinate relation of value between silver and gold. 

D. You hold coined money to be a commodity, and yet you 
would hinder or embarrass commerce in that kind, while, I suppose, 
you would favor it in other commodities. 

T. A sound policy of foreign trade looks to and provides for all 
exchanges of industrial products which are mutually advantageous 
to the parties concerned in it. But there is a domestic condition 
of monetary affairs that must not be sacrificed to the supposed 
advantages of international trade. 

I). Are the true interests of one nation in anywise incompatible 
with those of the rest of the world ? 

T. The true interests of one people, wisely guarded and effi- 
ciently promoted, must redound to the well-being of all others with 
which they have dealings; and the Avrongs and injuries of one are, 
in the long run, reflected upon all the others. 

D. The men of the Revolution asserted that all men were created 
equal, and it seems to me that in all intercourse our fellow-men 
should be regarded and treated accordingly. 

T. Oh, my dear sir, the Declaration of Independence does not 
commit itself to the notion that all men, through their whole life, 
shall continue equal in their business conditions and relations — 
that, because they were born babies, they must never grow out of 
the level condition of babyhood, or that the brightest of them in 
maturity shall treat the slow-goers as yoked with them step by 
step. That is an equality that nature knows nothing of. Cosmo- 
politanism, even at its wildest, cannot so merge and smother indi- 
viduality in community. Cosmopolitans wdio are only logicians, 
and for the most part mere word-mongers, find it easier to make a 
world for their system of government than to find a system of 
government fitting the Avorld as it is. 

P. I am waiting for the reasons why the money policy of a 
particular nation is governed by a rule necessarily different from 
the requirements of its foreign trade in other commodities. 



140 POLITICAL ECONOMY 



n 



T. In regard to credit money — paper money — it may be said 
that it has little or no international uses. It is gold and silver that 
are the money of the world, and it is in respect to them that uni- 
formity of relative value is in question. 

All the kinds of credit money are exempt from direct foreign 
influences, because they are not world's, but national money. 
These are out of the reach of international congresses, and so are 
safe from the meddlings of speculative theorists, who have taken 
the whole planet into their providential jurisdiction. But metal- 
lic money stands exposed to their interference, and, accordingly, it 
is tampered with from one end of the globe to the other by those 
who liave any sort of motive for reforming, deforming, or conform- 
ing it to their several standards of opinions. We insist, however, 
that although the precious metals are a world's money, they are 
none the less a national money, just as"we may say of a man that 
he is one of the human race, but he, nevertheless, belongs to his 
own nation and owes it allegiance, even to the extent of war with 
his other and remoter relations. In this relation money is a 
domestic concern, and has rights or duties which we are bound to 
respect. 

In all the smaller transactions of business it is an indispensable 
medium of exchange, and it is the grand security for the current 
value of the circulating credit money which promises its redemption 
in coin. Thus gold and silver perform the work of ordinary retail 
traffic, and stand security for some hundreds of millions employed 
in the larger exchanges. They work every day, every hour, every 
minute, and in every nook and corner of business affairs. 

The gold and silver money of this country are now reported by 
the Director of the Mint, and by the United States' Treasurer 
and Comptroller of the National Banks, at the sum of 427 millions, 
and the circulating notes outstanding at (368 millions. France has 
in circulation 4t)7 million dollars of paper money, 733 millions of 
gold, and 426 millions in silver coins. This shows the importance 
of care in the management of the basis of the credit medium in 
both coimtries; and exhibits, besides, the reason why France dare 
not demonetize her silver circulation, and cannot, in the other 
alternative of mono-metallism, reduce her gold to a market com- 
modity. 



STANDARDS — GOLD OR SILVER, OR BOTH. 141 

B. The argument from such facts as these bears upon the ques- 
tion of gold or silver as the legal unit of value, but it does not 
show any ground for the severance of the domestic from the wider 
policy of their management, 

T. These facts have their bearing even upon the subject directly 
in hand, as you Avill see. The diiference of rule and regulation, 
to which you advert, lies here. It is in the vast difference between 
the domestic and the foreign requirement of money among any 
particular people. Being especially concerned with the question 
in the United States, it is to be noted that our home products 
which go into market and the services paid for, have fifteen or 
twenty times the gross exchange value of all our foreign imports. 
The number of exchanges made in them are, perhaps, a hundred 
times as frequent, requiring the metals in their proper traffic office, 
as well as in the support and utility of the circulating notes. They 
are in incessant, actual, or potential use against intermitted and 
infrequent purchases of foreign imports. This difference allows 
me to suggest an analogy between the heart-beats in our bosoms 
and the hand shaking with our acquaintances. 

D. You sometimes mix poetry with your logic, and patriotism 
with principles of business ; so that, for a clearer understanding 
of the subject in hand, I should like to know Avhat you would have 
for domestic service in the matter of money ? 

T. In a word, I would, to the Avhole extent of the legitimate 
demands of domestic commerce, have a non-exportable currency. 
I would have an American money so decidedly national that it 
would not pass at its nominal or home value in any foreign 
market. 

D. Is it possible to make the currency required for domestic 
business of such substances or qualities as shall make it non-ex- 
portable, and at the same time serve all the uses required of it in 
domestic eomraerce ? 

T. Our greenbacks, fractional currency, and national bank 
notes were such a currency, and were the exclusive medium of 
home commerce during the great Rebellion, and afterwards up to 
the resumption of specie payments, at the end of the year 1878, — 
a period of seventeen years of war and peace. They were, as 
compared with gold, greatly depreciated. They were only prom- 



142 POLITICAL ECONOMY. 

ises to pay, and they rested for nearly all that time upon the un- 
certain solvency of the government ; and were, therefore, not at 
any time convertible into the money of the world at par. But, 
by the accommodation of general prices to their estimated valua- 
tion, they did manage the vast business of the necessary exchanges 
of the period. They were kept, let me say, preserved by their 
depreciation from foreign interference, and the disturbance of a 
foreign standard. In that same quality of depreciation below the 
nominal value our coins, especially the lower denominations of 
them, are preserved from exportation. 

D. Is there not something of fraud in debasing the coin of the 
realm by the authority of the government, as well as by the 
roguery of the clipper, sweater, or counterfeiter ? 

T. Are you not aware that you handle some of those debased 
coins every day without doing wrong to anybody ? Congress, by 
the act of February 21, 1858, for the purpose of retaining our 
fractional silver coins at home, reduced their intrinsic value nearly 
7 per cent. (6.909) below that of the standard or unit ; so that 
two half dollars, four quarters, or ten dimes have a weight of only 
oSl grains of the same quality, which is 28| grains less than the 
dollar piece ? Was there any fraud in fixing such exaggerated 
nominal value, declaring the truth of the depreciation, and warn- 
ing; forelsrners and all concerned of the difference ? Was it cheat- 
ing the people at home, or was it securing them tlie possession of 
a medium of payment which was so indispensable that in the early 
time of the Rebellion we were driven to the use of postage stamps 
to supply the need of small coins which their premium drove out 
of circulation ? 

This is not the only instance in which lawful coins have been 
reduced to prevent their banishment from the marts of domestic 
trade. In the year 1834 it was found that our gold money was 
worth abroad 6.262 per cent, more than the silver unit ; and, to 
prevent its exportation, by statute of 28th of June of that year, 
the gold eagle was reduced from 270 to 258 grains, standard, and 
from 247J to 232 grains of fine gold. Here was a heavy year's 
interest struck from that piece of the world's money at a blow, 
and this was done to make it something nearer to non-exportable. 

P. This exposure of standard moneys and of legal tender looks 



STANDARDS — GOLD OR SILVER, OR BOTH. 143 

as if there were a lurking mischief in the practice of minting the 
precious metals, and fixing upon them an arbitrary price or value. 

T. But the convenience of having the weight, quality, and 
excliange value of coins authoritatively ascertained outweighs all 
possible loss in their domestic use. In large transactions and in 
foreign trade the law of legal tender has little or no operation. 
This fact has induced the assaying and forming of these metals 
into ingots or bars. The coins of all countries are re-coined be- 
fore they enter into the currency of any other country. In this 
the essential quality of all money is regarded — its convenience in 
use — especially in the smaller pieces, which ordinary people are 
not prepared to test as to quality, or weigh as to quantity. 

P. But there may be fraud, or at least injury, in the opera- 
tion of legal tender laws applied to the larger denominations of 
money, though there is not in the debasement of small change, 
Avhich, after all, is in effect only a provision of counters for the 
conduct of the limited business it is required to serve. 

T. A brief notice of the changes that have been made in the 
values of coins by authority will suffice on this point : In the 
year 1066 the tower pound of silver was coined into 20 shillings 
(equal to 18| shillings of the troy pound adopted in 1527), and 
thereafter the same quantity of the metal, or troy pound, under- 
went the following startling changes: In 1527, forty shillings ; 
in 1553, sixty shillings ; in 1600, sixty-two shillings ; in 1816, 
sixty-six shillings. The legal tender laws of England fixed and 
unfixed these variant values of coins bearing the same name in 
something less than eight centuries. 

In France the livre, or pound weight, of the days of Charle- 
magne, about A. D. 800, contained fully seventy-eight times the 
quantity of silver that makes its legal tender weight now. Turkey 
has distanced England and France in the extent of her changes. 
In the year 1753 the piastre was worth three shillings and six- 
pence sterling (about 85 cents of our money). In 18 Go it had 
fallen to a fr&.ction over two pence (4|- cents), but was not worth 
commercially more than three cents. And I may add here that 
the United States pays out subsidiary coins at a profit to the 
government of 12 per cent, over the price of the silver in them. 

I). This history vindicates your startling proposition, that 



144 POLITICAL ECONOMY. 

money is not a standard of exchange values at considerable inter- 
vals of time, and even that it is not a measure of intrinsic equiva- 
lence at any time. Indeed, it goes far to show that for the 
purposes of domestic traffic a debased or depreciated, or even a 
counterfeit, currency, while undetected, may very well answer the 
purposes of trade. But Ave have in the present condition of civil- 
ized society an exchange of commodities with foreign nations for 
which a non-exportable currency is unfit — a kind of money that 
bars us out of their market and them out of ours. Must we have 
two kinds of money for these two kinds of ti'ade ? 

T. There is nothing in a non-exportable currency, of Avhatever 
materials it may consist, to hinder the exportation and importation 
of gold and silver at their bullion value. They are not now sent 
to, or taken in, the foreign markets as money — they are valued 
by the metal in them. England pays us so much per ounce for 
our gold and silver, coined or uncoined, alike ; not so much for our 
silver dollars or gold eagles. If you could get rid of the notion 
that the precious metals are money per se, you would understand 
that we could trade in them for all the purposes of trade as we 
did during the rebellion, and four or five years after its close, 
just as we trade in broadcloth or bar iron. It is time that the 
agency and uses of these metals were rightly understood. 

D. You assume that we shall have gold and silver beyond our 
home requirement for exportation when the balance of trade in 
goods and other products is against us. 

T. I am not making that assumption, any more than I am ad- 
mitting that when the balance of trade is in our favor we would 
have no use for the precious metals in which it would be paid. I 
am only insisting that these metals are not money in international 
exchange, any more than they were at the mouth of the pit from 
which they were dug. As products of industry, let them go 
abroad as freely as we export the surplus of our wheat, pork, and 
cotton. I am providing for the medium of home business in the 
form of money, and for foreign trade in the form of merchandise. 

P. The provision and protection of the home supply of money 
is so important Avith you that you Avould have it control our for- 
eign trade. But we have fre(i[uently been in debt to foreign 
traders. What is to be done then? 



STANDARDS— GOLD OR SILVER, OR BOTH. 145 

T. T cannot alter the fundamental principles of international 
trade. It is by natural law the mutual interchange of the pro- 
ducts of industry. Primitively, it is barter, pure, simple, and 
direct, and so far exempt from the accidents of indirect agencies. 
Under all changes of operation through intervening mediums, it is 
still barter, and this idea should control foreign trade as it does 
domestic commerce. 

P. You regard money, of any kind, not as in itself a value, 
not as a substance, but as an instrument, a leverage or pulley- 
power ; not the thing or weight to be moved, but as a machinery 
used in the process of moving other things ; having no identity of 
form or substance, but only an adaptation to the service in which 
it is employed. It may be metal, paper, or credit ; fact or faith, 
ideal or material — any conventional medium that best effects ex- 
changes of things. 

T. To familiarize this apprehension we need only advert to the 
various substances that have served as a money medium, and in 
the circumstances, one as well as another. Shells and beads, 
wampum and cowries, tobacco, codfish, cattle, platinum — attempted 
in Russia — gold and silver, generally, and circulating notes almost 
as general in modern civilization, or during almost the last two cen- 
turies. From such a review we must conclude that such money 
or moneys as these are not in themselves equivalents in the ex- 
changes of property, but are only used to represent or express 
the idea of value in the things exchanged. 

B. I understand you to mean that the necessary quantity of 
money, in any and every form, for domestic uses should be made 
non-exportable, to preserve it for service, and that the metals, 
called the precious, Avill pass for just what they are worth by esti- 
mation, like other products, in foreign markets, and so answer all 
the purposes of barter, while the bank note representatives or sub- 
stitutes for coin, will get leave to stay at home, 'because they are 
not acceptable abroad, and that the retained gold and silver will 
keep them solvent, provided we take care in our international 
trade to make our exports at least match our imports. 

T. I am glad to find the disputant growing into concordance. 
D. There is still one point upon which I am not perfectly clear. 
If money is not a standard of value — if the metals in use are not 



146 POLITICAL ECONOMY. 

absolutely independent of the ideal in estimation, why should they 
be i'e_2;arded as the basis and gauge of credit money values, and 
■why should they be held ready for the conversion of circulating 
promises to pay ? ^Vhy are they in fact and in law actual pay- 
ment ? 

T. They have a certain intrinsic worth which the bank note 
has not; that worth has a value in exchange everywhere which 
the bank note has not. The bank note says, I will pay on demand; 
the coin does pay without a contingency that must be risked. 
Specie in currency is like security behind a promise. In ordi- 
nary experience it answers rather as a test of solvency than as an 
actual redemption of a pledge. Representatives of unquestiona- 
ble value are so much an idea that the belief of convertibility, 
instead of actual conversion, is all that is required in a credit cir- 
culation. The Frenchman who called upon his New York banker 
in a time of money trouble expressed the philosophy of a credit 
circulation. " If you can pay me my money, I don't want it; if 
you can't, I will have it." That tells all that there is in a specie 
reserve. 

P. A.n argument that is usually called exhaustive, is better to 
be closed before it exhausts the parties to the debate. 

T. The over-fulness of illustration indulged in here antici- 
pates, and will apply itself to, our coming discussion of the topic 
of credit money. Keep the surplus of proof on hand for that 
purpose. 



CHAPTER XV. 

MONEY, A PRODUCER OF VALUES. 

T. The general proposition — Labor is the creator of all values 
— needs, for more abundant caution, to be guarded against such 
misconstruction as socialists and communists are prone to put on 
it. The affirmation must be understood to mean that labor is the 
primordial agent of production, just as native ability is the basis 
of all mental attainment. The phrase "knowledge is power" is 
like it, meaning that power is the out-come of knowledge, and not 



MONEY A PRODUCER OF VALUES. 147 

that education is inoperative. Levellers use such phrases when 
they claim for the seed the whole product of its growth which it 
gets only under the cooperative influences of soil, air, rain, and 
sunshine. Man stands in the presence of external nature in the 
attitude of a combatant, and his conquest of its forces, and his use 
of its contributions to his service, are his work in all the kinds of 
force which he exerts upon it. Every instrument which he em- 
ploys in the achievement is included in the great compass of the 
term Labor. 

Capital in all its forms is a producer of values. It is signifi- 
cantly called " dried labor." The cause is in the effect. If a man 
makes a spade and uses it, it is his co-worker and coefficient in 
further production. The steam force and the wheels and pulleys 
of a machine are joint contributors with natural labor in produc- 
tion, and are entitled to shares in the product proportioned to 
their share of cost in the work. The fact of ignoring or under- 
valuing the claim of capital, born of labor, is fatal to the philoso- 
phizings of socialistic theorists. It is nothing else than saying 
that the fruits of previous labor shall not be owned and used by 
those who created them. Such capital, whether it be in money, 
raw material, food, or clothing, is, in its way, as capable of new 
creations as is the laborer himself. 

P. In common language capital is restricted, in meaning, to 
money. The word is so employed in speaking of banking, manu- 
facturing, and trading. 

T. Money, inactive in private hands, is a fund or hoard. It 
takes the name of capital when it is at work. The common use 
of this distinctive name means that it is then a producer, and the 
moral inference is that " the laborer is worthy of his hire." 

P. Savages remain savages because they do not accumulate 
capital otherwise than beasts and bees lay up stores for consump- 
tion in the season of need. Their reserved acquisitions are in- 
tended only to meet current requirements. Their labor products 
are not made to labor for them in further production. I suppose 
I may say that capital is dead to them. 

T. Hence the credit in estimation, or the due reward in work- 
ing, to- that thing, above all others, which is the life-spring of 
human progress. 



148 POLITICAL ECONOMY. 

Indulge me in some reflection upon the functions of productive 
industry, in which capital may he treated as the coefficient in the 
multiplier of the power to wliich it is affixed. Let us start from 
the point that the conditions of human life are such that its indis- 
pensable supplies, comforts, and luxuries must be drawn by per- 
petual new creations from the elements of the earth and of the 
terrestrial heavens. Labor, in its largest sense, embracing that 
of the head, heart, and hands, is the cost of these supplies. 
Among civilized men, in advancing conditions, these necessities 
are ever-increasing in extent and variety. Human progress im- 
plies growing control over material things ; and this, again, makes 
a growing demand for them. Capital, of which money is a form, 
stimulates and promotes the production that must meet the ever- 
enlarging want. Money represents the sum of all the forces in 
this service. It is active as an agent, as well as a sign, a counter, 
of the exchange value of all other things, — such as labor, raw 
materials, machinery, and the intelligent directory of w'ork per- 
formed. Capital in the form of money, and credit acting as money, 
is in function and fact the primwn mobile^ the chief cause of mo- 
tion in all civilized industries ; for here, as in the Ptolemaic system 
of the planetary circulation, it is the outei'most revolving sphere 
which gives motion to all the rest. A country without capital has 
foot-paths for its highways ; with capital it has railroads. Run- 
ners are the express messengers of the one ; the electric telegraph 
carries the messages of the other. These conveniences have value 
because they are uses. The sum of all the utilities commanded 
measures the wealth and welfare of a people. The labor of the 
past is not dead, it is alive in the capital of to-day. 

P. Then, of course, if money is labor transformed, it is some- 
times a hireling, as in the low estate of its progenitor. 

T. Well, hireling, if you please. Do you know any office 
among men, whether rewarded with salary, fees, or wages, that is 
not in a hireling service ? Sometimes money works for its owner 
for wages called interest ; sometimes it takes the role of an em- 
ployer, when its yield is called profit. You may call the earnings 
of money invested, interest, rent, or wages. In the olden time its 
return to the lender was called Usury, derived, I suppose, from 
its use ; but the words fell into disuse three or four hundred years 



MONEY OF ACCOUNT. 149 

ago, under the prohibition of its exaction from their brethren 
among the Joavs, while it was allowed in their traffic with the Gen- 
tiles. I do not know the etymology of the substituted word, In- 
terest. It was probably adopted as a technical escape from the 
denunciations of the law and the prophets. 

P. The wages, or hire of service, are usually described by dif- 
ferent terms— some of them mere euphuisms, used because the 
rose will smell sweeter under another name. 

T. They are distinctive terms, used for descriptions of the same 
thing under some modification of circumstances. Wages is em- 
ployed to express the award of common labor; salary, for service 
for a term ; fees, for official or professional persons. Honorarium 
was used for the compensation of physicians and lawyers, when 
the common law refused its remedies for the recovery by suit in 
the courts of justice. In essence these are all alike. They are 
all labor. The mind labors as well as the body, and its products 
are called the works of the author. 



CHAPTER XVI. 

MONEY OF ACCOUNT. 

T. Out inquiry has brought us now to the subject of credit- 
money ; but we cannot enter upon it, restricted, as it usually is, 
to circulating notes or paper money, without a closer understand- 
ing of the general subject of Money of Account. Its explication 
is the key to the theory of money of every kind and of every 
substance. 

i>. As a description of a kind of money distinct from anything 
usually known by the name, yet treated as a substantive thing, 
and requiring distinctive treatment, it may be some sort of a logical 
necessity for the purpose of theoretical debate. 

T. Neither the phrase nor its intention is the invention of any 
sect of economists. It has long been the property of the analysts 
of the money function. Montesquieu, in his Sinrit of Laws, as 



n 



150 POLITICAL ECONOxMY. 



long ago as the year 1748, says: "There are real and ideal 
moneys." He adduces an illustrative instance in the practice of 
the blacks on the coast of Africa, who have a sign of value, with- 
out money, purely ideal. They say a certain article is worth 
three macutes, another six, another ten macutes. That is the same 
as if they said simply 3, 6, 10. Thus the price in their exchanges 
is fixed by comparison of commodity with commodity, for there is 
no money, and they have no reference to any medium of standard 
value existing in some other form or substance, and the goods 
themselves are directly compared in value. 

Bishop Berkeley, still earlier (1730), in the form of a query, 
which conveys an affirmation, puts the point thus : " Whether 
gold, silver, and paper money, are not tickets or counters for reck- 
oning ; and, whether the denominations being retained, although 
the bullion were gone, things might not, nevertheless, be rated, 
bought and sold, industry promoted, and a circulation of commerce 
maintained ?" Here is a distinction between money in substance 
and money of account fairly presented. 

I>. These authorities are speculative philosophers. Have any 
practical writers thus resolved the actual into the ideal ? 

T. The act of the American Congress of 1792, establishing the 
national mint, has this recognition of the insubstantial. It de- 
clares that " the money of account of the United States shall be 
expressed in dollars or units, dimes, tenths," etc. 

Alexander Hamilton, in an elaborate report on the proposed 
system of coinage made to Congress, expressly recognizes the 
distinction between " the unit of the money of account " and " the 
unit of the coins." Jefterson, in his report upon the same sub- 
ject, assumes the same distinction. Stephen Colwell concludes an 
exhaustive examination of the question by saying, " It is to- be 
noticed that we are not bringing forward or recommending any 
new mode of reckoning or computation. We simply assert the 
matter of fact that all prices, all books of account, all statements 
of sums of money, all bills of exchange, and promissory notes, 
and all bank notes, are expressed in money of account." 

The Marquis Gamier well and truly remarks, " We distinguish 
two kinds of money, — real money, or coins, and money of account, 
which is the expression of values, or the specification of prices. 



MONEY OF ACCOUNT. 151 

The valuation of merchandise made by the seller, the offer made 
by the purchaser, the accounts, the promises to pay, the stipula- 
tions of hiring, quotations of stocks, the rents of farms, — all that 
in any transaction precedes the act of payment, — must be carried 
on by money of account. Real money only intervenes for actual 
j)ayments." 

D. Suppose this were all true theoretically, what is its use 
practically ? 

T. I will not allow myself to argue the value of abstract truth. 
I content myself with the notion that it is well to understand what 
we and our neighbors and rulers are all the time talking aboat. 
Let me add to the authorities already cited the conclusion arrived 
at by Kelly, the author of the Universal Cambist, a work of admit- 
ted authority, founded upon information obtained with great labor 
and expense, in which the author was aided by the British gov- 
ernment. He says : " Moneys of account may be considered 
with respect to coins, as weights and measures with* respect 
to goods, or, as a mathematical scale, with respect to maps, 
lines, or other geometrical figures. Thus they serve as stand- 
ards of the value of both merchandise and the precious metals 
themselves." Mr. Colwell corrects the phrase " standard of value," 
justly remarking that " the money of account is not only as opera- 
tive, but as necessary, to commercial dealing when the coins cor- 
respond with it as when they do not," which is fully supported by 
such facts as these : England employed the pound sterling in 
computation and valuation for generations before the year 1816, 
although until then she never had a coin corresponding to it. 
The people of Pennsylvania, Massachusetts, and Georgia kept 
their accounts in British denominations for more than fifty years 
after, as well as before, the Revolution, though the unit was the 
dollar, and the coins were in decimal fractions and in multiples of 
it, and although they had not a single coin answering to the de- 
nominations which they persisted in using as a scale of values. 

This is what is meant by the rule of valuation as an ideal or 
mental proceeding. This is what Kelly means by saying that the 
money of account measures the precious metals themselves, with 
the necessary consequence that these metals are not the standard 
of mental valuation. 



152 POLITICAL ECONOMY. 

P. To the same purpose might be adduced the fact that the 
people of England during their twenty-five years of the suspen- 
sion of specie payments, ending in 1822, when their standard gold 
ounce troy went up from the mint price seventy-seven shillings and 
ten pence ha'penny to eighty-eight shillings, a rise of nearly 13 per 
cent., must have been estimating their coins by their money of 
account. 

T. We need not pursue the discussion of this subject further 
now. In the treatment of credit money we may have occasion to 
supply and amend deficiencies, and perhaps, to correct remaining 
misapprehensions. 

P. I cannot leave the discussion of the money-value question 
without indulging myself in a laugh at my own innocency of 
faith when I was an unquestioning believer in the metallic stand- 
ard doctrine. This is the way it took me: The British coinage 
act of 181G directed that the sovereign should contain exactly 113 
grains and xxViT^^^^ ^^ ^ grain of pure gold. I was awfully 
impressed by the precision of the calculation, and naturally 
thought that it must be that, and nothing less or more, and that 
the sovereign must have and hold that precise exchange value 
through all changes of time and revolutions of business affairs. 
How could I help it? What was all this ciphering for, if it did 
not fix a certainty, absolute and irreversible? The laugh came in 
when I heard the story of a quack doctor who ordered Biddy to 
"bpii a bread-and-railk poultice exactly two minutes and a half by 
the watch, for everything depended upon the exactitude of the 
concoction." 

" Ilivens," exclaimed Biddy, " he calkilates like an angel." 

That poultice drew on my money standard beautifully. The 
precision of the cooking and the minting explained each other. 



CREDIT MONEY. 153 

CHAPTER XVII. 
CREDIT MONEY. 

T. Coins and their representatives or substitutes, used as a cir- 
culating medium of exchanges, are usually described, the former 
as metallic, the latter as paper money. ■ You Avill have observed 
that I am conforming to this usage in the proposed treatment of 
the function of the circulating note, whether issued by bankers or 
by government officials. 

Promissory notes payable to bearer on demand, issued by a 
government or by corporations authorized by it, have all the 
essential qualities of a circulating money. The principal of these 
qualities is their convenience as exchangers of value. Money 
being only a medium, it is a thing whose use does not terminate 
in itself noribear any relation to itself. Its function is that of an 
instrument, and the essential quality of an instrument is its con- 
venience and eff'ectiveness in use. Its form or substance, there- 
fore, ought to be varied with its varying aiaptedness. If money 
were a thing to be consumed in use, or to lose its form and prop- 
erties in its proper service, its representative character would be 
lost, and it would become a commodity of consumption ; and so 
take the position in exchanges of a principal, and cease to be a 
representative of value. Its intrinsic qualities, therefore, are not 
constituents of its functionary quality. 

P. Our dictionaries render " money — anything which freely 
circulates as a common acceptable medium of exchange." It has 
been defined by its derivation from the Greek nomos, law, and is 
by the same etymology called nomisma. Aristotle is quoted for 
the inference that it has its value from law, and not from nature. 
You have adverted to the saying of Adam Smith, who regards it 
as dead capital, and to that of J. S. Mill, who excludes it in his 
definition of capital. Endless, and to me, confusing definitions 
have been based upon the word and upon the thing itself. I am 
^ glad to get a firm hold of it under the apprehension that it is 
essentially only a medium of exchange. 

T. A medium in any service may be more or less convenient. 
11 



154 POLITICAL ECONOMY. 

There is indirectness in the employment of any intervening agent. 
There is indirectness in ascending to a story ten feet high by a 
stairway of twenty feet. All the mechanical powers have indi- 
rectness in the application of force ; they are mediums of various 
fitness to the work done by them respectively, and their several 
qualifications for service are in their conveniences. 

D. Then Smith was not far wrong in calling money, as you 
would call a lover, a dead thing, for an inflexible rod or bar is as 
dead as a doornail. 

T. Smitii Avas not right. That is not dead wliich does living 
things, or which under living force multiplies living results. There 
is something vital in money-power. If you want 100 bushels 
of potatoes ti'ansported from the Pacific shore to New York, sell 
them there, transmit the money and buy as good ones where you 
want them. The freight of the medium will cost you a penny or 
two ; the delay, a day or two, or a minute or two ; and lo ! you 
have your potatoes in hand. Now, if " there is no wbrk or device 
in the grave," you must have had a lively servant in your employ. 
You caught at the analogy of the lever ; money has the lever- 
power, but it is not an inflexible instrument which cannot move 
without a solid fulcrum and a loss of time proportioned to the 
weight it moves. If a lever is an instrument, and money is, also, 
an instrument, they are not hung on the same hinges. Think of 
the dift'erence in their respective motor powers. 

But, to the tjuality of convenience in money service — it is this 
that determines the denominations of coined pieces of the precious 
metals, and the name-value of their paper substitutes. The deci- 
mal fractions of the silver dollar are ultimately more convenient 
than their paper representatives, because they better bear the 
wear and tear of small change in every-day business. The Di- 
rector of the Mint, a year or two ago, stated the average lifetime 
of those little notes, during the suspension of specie payments, at 
about 18 months : and the cost to the Government of keeping 45 
million dollars' worth of them for a year in good repair was about 
a niillion of dollars. In this respect this fractional currency was 
very inconvenient, that is, it was not as good an instrument as. 
small silver coins are. 



CREDIT MONEY. 155 

P. Let me interrupt. What is meant by the Unit of value as 
it is usually employed in discourses about money ? 

T. It is a necessity ; and, therefore, a device of notation, or of 
computing and expressing quantity in aggregate. The word or 
figure 1 embraces all the fractional parts of which it is capable, 
and all increase of that quantity is expressed by so many of its 
units, or integral groups, or individualities. A sum of money is 
a certain number of its known denominations, that is, of its units. 
With us we count by the dollar unit and its parts. In England 
the pound sterling (worth $4,866 of our money) is the unit em- 
ployed. In France it is the franc (about 19 cents). In Brazil the 
real, or for convenience the milreis (iOOO reis), worth about 54 
cents, is in ordinary use. The milreis of Portugal is worth twice 
as much ($1.04). 

The pound sterling is awkwardly large for the expression of 
small sums, for which reason the English make a sort of unit of 
the shilling, for convenience ; as, instead of two pounds- and a half, 
you will hear them say fifty shillings. The French franc is incon- 
veniently small for the enumeration of large amounts. It runs up 
into billions in the national debt. In our annual mint reports you 
will find a table of the various values of the units in use in all 
countries. 

P. Geographical miles, I suppose, may be called units of 
measured distance ; like the units of value, they differ greatly in 
different countries. It is curious that measures of length should 
be arbitrary or ideal, or mere mental processes, just as measures of 
value are. There is another example in the scales of thermometers, 
as in the Fahrenheit, the Pteaumur, and the Centigrade. They, 
also, take different zeros, and they are at par with each other at 
different numbers of degrees upon their respective indicators. The 
ideal seems to rule in the apprehension of the most absolutely fixed 
and determinate, as Avell as in the most inconstant quantities and 
values. It results that the mind is the measure of matter, and 
opinion has no standard fixed, correspondent, uniform, and uni- 
versal in the expression of quantities. 

T. You have the idea. Nominal values, weights, and measures 
have dominion in the mind. Indeed all forces are apprehended 
there, whether material or moral, justifying the saying of the poet, 



156 POLITICAL ECONOMY. 

" The ideal is the real ;" and the practical proverb, " Things are just 
as you take them." So let us take care liow we disturb the tables 
of weights and measures, and the values of money denominations, 
as they are in the common understanding. An Englishman counts 
simple abstract numbers in decimal categories ; he counts his 
fingers and toes by fives and tens. He has that idea of quantities 
in his head, but when you put him to translating his twenty shil- 
linn-s and his twelve pence into dimes and multiples of them, though 
they be in his familiar decimals, you bother him. Even in the 
reports of the London money market you will find our dollar of 
100 cents stated at 103, to avoid the trouble of computing it at 
its exact worth in shillings, pence, and fractions of a penny. In 
the money article of our newspapers you find this difference between 
the London and New York reports of the selling price of United 
States stocks. 

P. Circulating notes, having their use in their convenience, their 
denominations are probably under the same rules as their general 
use. 

T. Yes ; this is one of the conditions to be observed in making 
a medium of them, as a register or notation of exchange values in. 
the transaction of business. They should be integrally divisible, 
and as readily aggregated into any required sums or quantities. 
One, two, and five dollar notes answer the purpose perfectly. Of 
these, all sums, in whole number, up to ten, are readily aggre- 
gated ; and all intermediate denominations are unnecessary, and, 
to some extent, inconvenient. Tens, twenties, and fifties are less 
bulky and burdensome for all the larger amounts which they cover, 
and are exchangeable into the lesser denominations when retiuired. 
The still larger notes, hundreds, five hundreds, and thousands are 
less necessary, and but little used. They carry no interest as the 
equivalent sums on deposit may do which are subject to draft, and 
which is just as convenient as the notes are, and even more so. 
The numbers of the various denominations issued by the National 
Banking Office indicate the relative reipiirement by the public. 
In November, 187U, the number of five dollar notes outstanding 
was 19,582,364 ; of tens, 10,973,624 ; of twenties, 3,632,608 ; 
of fifties, 426,498 ; of one hundreds, 269,116 ; of five hundreds, 
1283 ; of thousands, 283. The ones being largely supplanted, 



CREDIT MONEY. 157 

or supplemented, by the silver coins then in use were only 3,567,- 
200 in number; and the twos but 1,046,249, because, as I sup- 
pose, the one dollar notes usually replace them in use. 

P. To provide the money of the realm is held to be the pre- 
rogative and the duty of the sovereign authority. If so, the gov- 
ernment should take care to make the supply adequate in quality 
and convenient in kind for all the purposes of business. 

T. The manifest insufficiency of metallic money in all commer- 
cial communities requires the deficiency to be made up by credit 
money, of which the circulating note is an important portion. It 
is that part of the money of account that the convenience of busi- 
ness, without personal cxedit, requires. Such deficiency of circu- 
lating money need not be closely calculated ; it is enough to show 
that it is very considerable. The Comptroller of the National 
Bank Currency reports an aggregate of outstanding notes issued 
by the Treasury (greenbacks), and by the national banks on 
the 1st November, 1879, at $699,634,759 ; but this sum embraces 
$15,710,960 in fractional currency. I think it safe to subtract 
from this total so much for the probable loss of these little notes 
as will leave it at 694 millions. 

The estimate of the gold and silver in coins and in bullion in 
process of coinage at this time is $481,700,000. These sums 
amount to say 1175 millions in round numbers. This gives us the 
proportion of paper circulation as 59 to 41 of coin, or nearly as 
nine dollars of paper to six of coin. 

But there is, besides, a specific kind of credit money in circu- 
lation as effective as that in the form of circulating notes. This 
is in the deposits in the banks and other money institutions. The 
Comptroller of the National Currency states it thus : — 

Deposits io the national banks, . . . $713,400,000 

" in State banks and private banks, . 397,000,000 

in savings banks, .... 783,200,000 

$1,893,600,000 
Now add the note circulation, . . . 694,000,000 



12,587,600,000 



This gives us a provided circulation of notes and deposits, con- 
vertible into coin, of a sum no less than 2587 millions against the 



158 POLITICAL ECONOMY. 

gold and silver coins, amounting to 481 millions (supposing the 
two kinds to be proportionately in use and in reserve). The 
former. 84.32 per cent, of the total, and the latter, 15.67 per 
cent. — something more than 5|^ to 1. 

These figures, which are the only data we have, manifest the 
utter inadequacy of the specie in use for the service required of 
circulating money. 

P. More than three thousand millions of effective money in 
circulation ! 

T. The census of 1870 estimates the stock of marketable values 
in real and personal estate at thirty thousand millions. The tenth 
part of this property, bought and sold, would swallow up the three 
thousand millions. Beside this the census enumerations of other 
values, — the products of the current industries, with wages of all 
establishments, make a total of 11,3(30 millions. How much 
more will you allow for professional and official fees, for travel- 
ling and freight expenditure, for rent, for boai'ding, church, and 
charitable contributions, and for festivities, theatrical and musical 
expenditure, — all, and many another employment and enjoyment, 
requiring current money ? Shall we lump the account current at 
twenty, thirty, forty, or fifty thousand millions, and then see how 
our three thousand millions in the money exchange service meets 
the requirement ; and, more especially, how the sum of the money 
meets, measures, and controls the sum of the prices, according to 
the famous equivalence doctrine ? 

D. If the money goes into the service six or eight or ten times 
it would cover the demand in payments, though it might not regu- 
late the prices current by the proper force of its simple quantity. 

T. Are not all commodities and services paid for in some way 
just as often as the contracts of exchange are made, and is not the 
sum of these payments exactly equal to the sum of the prices of 
the things sold? The same coins, and coin-paying notes, are put 
upon duty, if you please, twelve or twenty or fifty times in pay- 
ments, but these notes and coins are purchased and paid for every 
time they are used. Don't forget that business in civilized society 
is not direct barter, that is, money is not present in a hand-to-hand 
exchange when its denominational value is named. Put it to such 
service; if its quantity could be enhanced to the vast requirement, 



MONEY OF ACCOUNT, 159 

instead of being, a facility in the transfers of business, it would 
cost in time and toil more than any other tax imposed upon prop- 
erty. All that it does not, and in the nature of things cannot do, 
is accomplished without its intervention by that other agency 
which we have called money of account, and which for the most 
part is settled by set-off", in which nothing is used but the name of 
money as a system of notation. 

P. I understand you to mean that if a dollar is transferred ten 
times, its purchasing power is not multiplied ten times by count- 
ing it over and over again, as against the principal or prime value 
of the things purchased by it, because they are multiplied just as 
often, and, therefore, the innate power of three thousand millions of 
it cannot be made to meet the innate cost-power of thirty thousand 
millions worth of commodities; and I infer that it is a medium 
only in the exchanges which it is actually used to effect, and that 
all the other twenty-seven thousand millions are negotiated with- 
out any agency of the money represented by coins and circulat- 
ing notes. The drafts, cheques, and book accounts which do this 
large business, are a sort of mediums or sub-mediums, or ancillia- 
ries in the common service, and are equally eff"ective, though not 
warranted by any public or corporate guaranty. Moreover, I 
infer that the true idea of a medium is not in its substance, but in 
its service. 

P. Experts have estimated the amount of the gold and silver 
coin in the country in 1860 at 200 millions. In the 20 years 
since the production of above 1270 millions worth of these metals 
from our American mines is reported. This sounds like an over- 
flow. What has become of it ? How has the demand met the 
supply ? It has not raised prices — they have fallen ; and the 
paper money substitutes have risen from 207 millions in 1860, to, 
you say, 694 millions. I have been ciphering till I am tired and 
out of patience with its results. 

T. So far as your data go, the influx is easily disposed of. 
The principal or fund amounts to 1470 millions. Of this, 910 
millions excess of exportations to foreign countries over imports 
from them leaves but 560 millions. Take from this the 481 mil- 
lions on hand and you have but 79 millions for consumption in the 
arts and manufactures, — not quite four millions averaged per year, 



IGO POLITICAL ECONOMY. 

■which is not nearly half enough; but the deficie^icy may be sup- 
plied by the money brought in by immigrants and travellers, 
which is not reported at the custom-house. None of these items, 
official or estimated, are accurate enough, or can be so, to render 
cipherings about them into certainties. 

P. The specie circulation is certainly more abundant than at 
any date before resumption. The silver dollars are complained of 
in the banks and in the Treasury as a burden ; it is spoken of, not 
in thousands or millions, but in tons, and you cannot get green- 
backs or national bank notes in large quantities for gold coins. 
Does not this state of things. indicate an overplus in the supply of 
coins ? 

T. Not of itself. The notes are now at the par of gold, and 
the convenience of the paper in use explains its preference. 

P. I thought the paper dollar only served to make up for the 
deficiency of the metal dollar in the equalization of the current 
exchanges of business ; but it seems now, that it supplants the 
weightier medium in use, naturally enough, to be sure, for the 
bank note at the par of gold is in fact an order for the gold where- 
ever you may want it ; and this, I suppose, is the meaning of the 
gold and silver certificates of deposit given in the Treasury re- 
ports, and I observe that the sum in silver certificates is usually 
nearly twice as great as of those of gold — the silver is so much 
more inconvenient than +ho gold, — still, the supply of paper money 
has fallen off quite 90 millions in the last six years. What does 
that mean ? 

' T. The number of national banks is now above 2000, and there 
are more than 4000 State banks, private bankers, and savings 
banks besides. All these money institutions are clearing houses 
for their respective districts, and the larger ones for the Avhole 
country in effect. In them, and on their books, debts and credits 
are set off against each other without the intervention of either 
coins or notes, and thus tend constantly more and more to displace 
the common medium of payment. All advancing improvement in 
the order of business is marked by a proportionately diminished 
cash circulation in the transaction of equal amounts in commercial 
exchanges. 

P. Haunted by the commonly-received doctrine of " supply and 



• CREDIT MONEY. 161 

demand" as a regulator of prices, the wonderful yield of the mines 
of California and Australia threatened, upon our theory, such an 
overflow of the precious metals upon the commodity market of the 
world, that we feared the jn-ecious would soon sink into the rank 
of the useful, and be " nothing accounted of" except for their 
qualities of texture and resistance to wear and tear in implements, 
utensils, and ornaments. The facts developed and suggested by 
such inquiries as these drive one upon estimates of amounts as a 
way of getting comparative quantities. The present yield of the 
mines of the United States, Russia, and Australia may be put at 
180 millions. The director of the mint thinks the consumption in 
Europe and America in the arts and manufactures is from 45 to 
55 millions of gold, and from 25 to 35 millions of silver, together 
70 to 90 millions, or nearly the half of the annual product. And 
there are, besides, the vast populations of India and China, which 
for a century have absorbed from 20 to 40 millions of dollars worth 
of silver per annum. I suppose that the expansion of commercial 
exchanges which the influx of money induces will provide for it. 

T. Adam Smith observed the fact that the importation of 120 
to 140 millions of francs per annum for more than a century, 
helped by a vast amount of paper money in that time, had not 
depreciated the exchange value of the precious metals in Europe. 
On the contrary, the prices of commodities had fallen very con- 
siderably, as measured by the stock of the medium in use. 

I do not think it at all probable that any yield of the mines yet 
to be opened will so diminish the exchange value of these metals 
as to carry their ratio below the decline in the prices of products 
that shall in future be confronted Avith them. 

Among the apparent mysteries of metallic money is this one : 
its exchange value is not governed by its quantity. Its scarcity 
and its abundance are not subjectively operative, but are only 
relative to the supply of its substitutes, or the means of payment 
that may be made to replace it. The fluctuations in its currency 
eff"ectiveness depend upon the credit-money, or upon the credit of 
the credit-money in the business market. Lessen the stock of 
coins in circulation within any reasonable or probable limits, you 
only call into use so much more credit-money, which in all its 
kinds works in commerce by way of set-off, and so far diminishes 



162 POLITICAL ECONOMY. 

the demand for coined money. Increase the stock of coin as much 
as possible, and so far as it is conveniently available, it merely 
substitutes cash for deferred payments. The digging for the 
precious ores is not ever among the positive and independent 
causes of expansions and contractions of market values. Its 
results cannot over-match those of the thousand and one industries 
that are working the other way, and cheapening the things for 
sale faster than the mines can cheapen their output. The standard, 
as it is called, does not more affect the weight which it is supposed 
to lift than the weight affects it. That " engineer is hoisted by 
its own petard." 

D. I thought you would make the money of the country non- 
exportable ; that you would even debase the metallic required for 
domestic use rather than risk the effect of its certain departure 
from its duty as a medium of exchange. If so, a rise or fall in 
the tide of its influx cannot be insignificant. 

T. The paper money in circulation is in itself non-exportable, 
and the coins, if need be, should be protected from the melting- 
pot and from exportation. Bullion is a commodity of commerce, 
and all the precious metals in that form, and all excess of coins made 
from them, may go abroad as freely as cotton or corn. But I 
would have enough money active at home to support its industries 
and enterprise ; and I would have that money stable and |)liable 
to the exigencies of commerce. I would protect business from the 
ups and downs of a fluctuating fund of current money, that, 
among other good results, debts may be paid in the values at 
which they were contracted. I Avould not have profits and losses 
on a perpetual see-saw of chances. I prefer the regular rule of 
law to the happening of a lottery in the issues on which men de- 
pend for their Avelfare. It is one of the chiefest^of the equities 
which civil government is bound to secure to its subjects, to main- 
tain the validity of contracts. And this can be done only by 
maintaining the nominal at the exchange value of the money of 
the people. 

If money shall become cheaper in exchange for labor, as it 
must when the world grows more wealthy, the change or the 
depreciation is just what happens to all other property ; and gov- 
ernment is not under any exceptional obligation to keep old 



BANKING. 163 

debts unimpaired amid the decline of all other things of value. 
The fixed property in land and labor-power must, and should, by 
the expense of their improvements, and through those improve- 
ments made more and more effective in service, rise relatively to 
the prices of the things which they produce ; among which are 
money and money claims. But such change is gradual, and does 
not affect the current credit values in which ordinary business is 
conducted. " The mills of the gods grind slow," and the world 
has time to be ready for the grist. Let there be steadiness in 
change, growth without shock, in the provident arrangements of 
societary life. 



CHAPTER XYIII. 
BANKING. 

T. Of course we do not intend in our discussion of this subject 
to treat it as if Ave were producing a system such as might be a 
directory for the conduct of bank officers. We are neither re- 
quired, nor are we competent, to perform such a task. 

Money banks are of several kinds. Observe, however, that we 
do not give the name of bankers to the mere custodians of cash, 
who keep and return the identical sum or substance in bulk with- 
out use. This is only another way of hoarding, and has nothing 
of the function of banking in it. The institutions that fall pro- 
perly within the name may be classed as of two kinds only, 
though neither of these has an invariable character. They are 
sufficiently distinguished for consideration as Banks of discount 
and deposit, and Banks of issue. 

One of the earliest banks of deposit (which must also have 
loaned its funds at a discount for the use) of easy reference is 
that mentioned in the gospel of Luke (chap. xix. 23), in which 
money was deposited so that the owner, after an interval, could 
receive it again with usury. Such banks, doubtless, existed long 
before the Christian era, for the very earliest organization of 
commerce required a money-exchange corresponding to the co- 



n 



164 POLITICAL ECONOMY. 



existing commodity-exchange. Such banks held the money left 
"svith them, and of course issued some sort of certificates of the 
deposit, and these evidences may have been made negotiable, or 
even payable to the bearer. 

P. Some of our banks do not pay interest on deposits. I 
believe very few do. 

T. The deposits in our banks are largely credits to their custom- 
ers, and of course do not carry interest in their favor. Deposits 
of actual money are received to be returned on demand, and the 
banks pay themselves for their trouble and risk out of the interest 
which they derive from the use of such money in their ordinary 
business. I do not know any bank whose sole agency is in the 
holding and returning the money intrusted to it, upon any other 
compensation than its profit in the use of the fund. Banks of 
deposit are, therefore, better described as banks of discount and 
deposit. 

-P. You seem to regard these banks as indispensable. 

T. They are certainly inevitable. Society has never been 
without them in historic times. The business of collecting and 
distributing the spare money of people who had it in use as a 
medium of commercial exchange has always existed. 

D. The depositary does not increase the stock of money by 
merely handling it. The banker's chest is not a nest in which it 
breeds or increases any more than it does in the pocket or safe of 
the owner. In union there is strength, but can this be said of the 
gatherings of money in hands that do not own it or employ it in 
further production ? 

T. There is a maxim of the common law, usually expressed in 
Latin, but which I suppose might also be found in the Sanscrit or 
even in the Mohawk tongue, " that which one does by another he 
does by himself." The banker is a collector and distributor, as the 
clouds, the rills, and the rivers are. The rills that a dead leaf 
might obstruct make the rivers, and the rivers repair the waste of 
the ocean. The currency that floats the commerce of continents, 
struck stagnant, would evaporate into thin air. It is the accumu- 
lation that gives it serviceableness. The deposit banker is the 
little river that gathers the rills into a tide of effective force, and 



BANKING. 165 

he disperses them again in currents that irrigate the sources from 
which they came. 

D. Sirailies used in didactics, though something like, are not 
as clear, nor always as safe, as object teaching. They task the 
learner to find the correspondences, and he may miss them. 

T. Allow the assumption that hydrodynamics would help, not 
embarrass, the apprehension of a currency of another kind. It 
suggests the tributary supplies of the many rills, tljeir accumula- 
tion of force, the effect of their distribution, and allows also for 
the obstacles, drains, rifHes, falls, and overflows, and so is illustra- 
tive of their counterparts in the conditions and accidents of the 
money circulation. It will, however, promote our aim to trace the 
commerce in money in narrative plainness. 

P. Yes ; it seems to me that elementary instruction is often cut 
in chunks too fat for easy digestion. Nothing is lost by well 
adapted amplification. The time and trouble of the outfit saves 
as much and more on the journey. Too much compactness gives 
only the more trouble in the unwinding. 

T. Well, then, to begin at the very base of the edifice : — Im- 
agine a condition of society in which coins of the precious metals 
are employed just as other commodities are in simple barter; the 
coins, or their material, present and passing from hand to hand 
in every payment made. Here we have no banker or banking 
function interposed. Every man keeps his cash in his own cus- 
tody. There is no credit nor confidence, and there are none of 
the risks, as there are none of the conveniences of a credit system. 
In this state of things it is obvious that money must lie idle in the 
hands of the owners during the intervals between sales and pur- 
chases — in a state of suspended animation, useless to the possessor 
and to the community — a fruit of labor not fructifying ; in garner 
and not growing ; the mummied remains of a vital organism. 

Now, suppose that the owner of the fund desires to improve it ; 
to have it active in his own service and in the service of the com- 
munity which requires its instrumentality in productive industry. 
(I wish I could make the vi ox di productive mean something of 
growth, increase, new creation.) Its employment for use is in its 
conversion into other property yielding profits to himself and to 
others, who will hire it for its active power. He can so use it 



166 POLITECAL ECONOMY. 



^ 



himself only to a very limited extent. lie is not skilled in every 
kind of production of Avhich his money is capable. The amount 
in his hands is too small to be available. It is useless. He can 
make nothing of it. But there is a depository at hand that can 
make forces out of fragments. The banker gathers it as the 
harvester gathers the multitude of grain stocks into bundles, or 
he gathers the little rills into currents capable of moving the wheels 
of business. The wonderful result is indicated by the report of 
the Comptroller of the Currency. On an acknowledged deficiency 
of returns he reports in the year 1879 an accumulation of deposits 
of above 1100 millions in the State banks, private banks, and 
savings banks of the United States. (The deposits of the National 
banks are not included in this sura, because they may be supposed 
to consist more largely of credits.) It is safe and much within 
bounds, to say that a thousand millions of dollars are thus gathered 
from dribblets of deposits, and made active in the general service 
through tlie agency of bankers, which would otherwise be useless 
and profitless in private hands. 

The reported capital employed in all our manufactories is just 
about twice this amount. Thus, half of all our industrial estab- 
lishments draw their resources from this source, and one-fourth of 
all their products are due to it. This proximately measures the 
cumulated force of the thousand contributory rills of idle cash to 
the motor power of industry and commerce. 

P. What position do our savings banks hold in the common 
money service ? 

T. Some of them take deposits on time stipulated, and lend 
money on landed securities, which is not banking in its present 
usage. Some deal in accommodation paper, as do also some banks 
of issue ; but this is bad banking generally. It is not a discount- 
ing of paper coming due which will be met with products in the 
market. It may, indeed, represent available values, but it may, 
also, be a provision for old debts, and, so, not an accruing source 
of payment. xVccommodation paper does not represent the antici- 
pation of products, but a balance due on past transactions, whose 
security is in the present solvency of the borrower. He may be 
able to meet the engagement, but it must be from past earnings 
which he expects to realize, but are not presently available. The 



BANKING. 167' 

eminent function of banking is the anticipation of payments, not 
adjustment of subsisting and outstanding or over-due debts. Busi- 
ness exchanges are movements in Avhat people are doing, not in 
what they have done. The business medium is not a matter of 
epitaphs, but of life histories and affairs. Banks which lend money 
on landed securities cannot have the fund so invested to meet their 
own debts and demands. So far they are mere money lenders, 
and not banks, in the current meaning of that function. 

P. The banks of your first-named class — banks of discount and 
deposit — by issuing certificates of deposit, and by paying checks 
and drafts, give circulation to the money of account. 

T. That was an early form of the money agency, out of which 
the greater convenience of the circulating note has grown. The 
common text-books and general histories, noticing the fact that 
two or three centuries ago the institutions which we now call 
banks did not exist, inform us that so lately as the time of the 
restoration of the Stuart dynasty (A. D. 1661) the goldsmiths 
of London kept the cash of the commercial houses, paid their 
drafts, and loaned balances in their hands, paying themselves for 
trouble and risk out of the interest of such surplus of deposits as 
experience showed could be loaned consistently with the solvency 
of the bankers. 

P. I observe, in the Comptroller's report of December, 1879, 
a summary of the corporations and private bankers, who are 
money dealers in various ways, which, I suppose, are all engaged 
in collecting and distributing the spare money of the people, — all 
borrowers and lenders, depositaries and discounters, active in keep- 
ing it in circulation and in use. In this statement there are, out- 
side of the national banks, 1005 State banks and trust companies; 
2634 private bankers ; 29 savings banks with capital, and 644 
savings banks without capital, — altogether holding an aggregate 
of deposits amounting to 1180 millions. If we add to this sum 
the deposits in the national banks, we have a grand total of 1893 
millions. 

T. Let me explain, to the purpose of the point now under con- 
sideration. The Comptroller of the Currency, under an act of 
Congress, is required to collect and publish the statistics of the 
money institutions of the country which are not under his control, 



168 POLITICAL ECONOMY. 

and whose condition he is obliged to gather from any and all 
available sources. He has several times complained of a very 
considerable deficiency in the data so obtained. Many of the 
States, especially those of the Northwest and South, do not re- 
quire reports from their money dealers; and the Comptroller of 
the National Currency, after several years of unsuccessful en- 
deavor, has adopted the register of the internal revenue depart- 
ment of the general government as the most reliable, so far as it 
goes. This is official, and certainly not exaggerated, because the 
amounts are taken as a basis of assessment for taxation. If, in' 
England, a full fourth of the subjects of excise contrive to evade 
reports, how much more so in our widely extended dominion, 
where internal taxes are not only unusual and unpopular, but are 
as often as possible resisted and evaded. 

Moreover, vast sums passing through the hands of depositaries, 
are entirely out of the reach of government officers. There are 
uncounted millions collected in trivial sums, and invested by the 
custodians of secret, charitable, and religious societies. As a hint 
of the purely secular and business associations, take the building 
associations of a single city — Philadelphia. At a meeting of the 
Social Science Society in May, 1876, it was stated that there were 
then in active operation in Philadelphia 450 of these associations; 
their loans on mortgage security amounted to 72| millions ; and 
their receipts, during 1875, rose to more than seven and a half 
millions. 

You will observe that, in summing up the deposits reported by 
the Comptroller, I used his official figures, allowing an abatement 
for that part of them that may be mere credits on the books of the 
bankers ; and, so, not representative of their collections of spare 
or idle cash from the people. I now suggest that the uncounted 
and unreported may be safely taken to replace and even over- 
balance all these deductions. I believe that the grand aggregate 
of tiiese collections and loans hovers about a total of two thousand 
millions. Now, mark, the reported capital of all the manufactures 
returned by the census officers in 1870 was 2118 millions, and the 
value of the products twice as much — 4282J millions. May we 
not conclude that the money, which would be otherwise idle by the 



BANKING. 169 

intervention of bankers, is made active in moving nearly all the 
enterprises of our productive industries ? 

P. Do I understand you to mean that the employment of money, 
immediately or directly by its owners, in the production of com- 
modities, is an inconsiderable and almost an insignificant part of 
its work in the hands of those who hire its use ? 

T. I think so. 

P. Then it seems that money, which Adam Smith, following 
David Hume, calls "dead capital, and but a small part of the 
capital of a country, and always the most unprofitable part of it," 
turns out to be a very lively thing in use, and a productive agency 
of very great potency. What could have induced J. S. Mill to 
say that " money, as money, satisfies no want, answers no pur- 
pose ? " 

T. No amount of intelligence, or of critical acumen, prevents 
a hackney logician from taking the bit in his teeth and running 
away Avith the driver. Mill's definition of political economy is 
the point at which his pony started. Recollect that he says " It 
is an abstract science ; " and that " it reasons, and must neces- 
sarily reason upon assumptions, not from fact." That conception 
put him above facts, out of the way of facts, and opposed to facts. 
He does not allow money any place in his definition of capital. 
He does not treat it as an instrument by which men acquire and 
exert power over the forces of nature ; yet he accords such agency 
to the labor, food, and clothing, which money supplies, in all the 
processes of industrial production ! 

P . Is there an exact and instructive analogy in the circulation 
of the blood in the animal frame to the circulation of money in the 
body of the community ? 

T. The idea of the money circulation, with its allusions to the 
movement of blood in vital organisms, has certain striking corre- 
spondences. Blood is circulated as the conveyer of nutriment or 
material for the manufactories of the living system ; it is, besides, 
a stimulant of the vital functions. In these offices the analogy 
authorizes the interchangeable use of the word. There is in both 
the like required constancy and sufficiency of supply. But"there 
are differences between these two circulations which must be no- 
ticed, as well and as carefully as the real correspondences. From 
12 



170 POLITICAL ECONOMY. 

greatly increased force of propulsion and inordinate rapidity of 
the blood circulation mischiefs result, for which there is no proper 
parallel in the money movement through the channels of business. 
^Momentum, or the weight multiplied by the velocity of the vascu- 
lar circulation, besides quantity in relation to time, — so many pul- 
sations to the minute — means force of impingement and pressure 
upon the vital organs. There are no such effects attending an 
accelerated movement of money — nothing corresponding to ple- 
thora or oppressive engorgement. It does not gorge its recep- 
tacles ; nor, as a result, does it morbidly exaggerate or repress 
the agencies to which it ministers. 

D. You surprise me. Have I not heard of an inflated cur- 
rency, inducing speculative prices? But, your doctrine does not 
admit of an over-supply of money. What then is the meaning of 
sudden expansions and contractions of the circulation, and, the 
business revulsions attending them ? 

T. The panics and pressures of the markets have not been oc- 
casioned by, or attendant upon, the conditions of the thing which 
you and I are thinking of, when we are considering money in its 
normal functions. The money system can take care of itself, un- 
der legitimate administration ; which we will show when we come 
to the subject of banks of issue. The outbreak of the disturb- 
ances which you speak of, usually takes its earliest form in a 
panic ; that is, an opinion, which works itself into a pressure, the 
pressure being a rebound of opinion. This can happen disas- 
trously in any mode or condition of the credit system. When 
faith fails, dependent facts follow as a consequence. When I 
speak of the money circulation and its laws, I am talking about 
a veritable money, as when I speak of the blood circulation, I do 
not mean the arteries and veins crowded with whisky, or over- 
loaded with water, or any other abnormal mixture. An inflated 
currency is a circulation filled with air bubbles, which will not bear 
the pressure of its channels. It is not a healthy medium, but a 
currency in fits, marked by froth and jerks, speculatively inflicted; 
an airy notliing, which has not its cause in substantive things, but 
in notions of such things. 

D. Bankruptcy and ruined fortunes tha^ were sound yesterday 



BANKING. ■ 171 

and beggared to-day ai-e very real things, and have their causes 
in the conditions of things in which they arise. 

T. Morbid visions and insanities are as real things, and arise 
out of the conditions of things. When a man finds himself turned 
into a tea-pot, or feels a shoemaker at work in his stomach, he has 
probably mistaken the occasional cause of his distress. It is not 
his natural diet, but the flatulence of indigestion that produces the 
results complained of. You are not afraid of ordinary changes in 
the supply of metallic money. Nobody ever thought of attributing 
sudden business inflations and contractions to that cause ; and 
credit money limited to and coextensive in quantity with actual 
exchanges, to which it is very capable of accommodation, is as 
well based upon real values as coin can be. It is, in fact, and in 
its nature, a better measure of exchange values than the arbitrary 
prices of coins are. The former is the express image of the 
things which it represents, while coins carry with them nothing 
so exactly as the symbols of sovereignty — the head of Victoria or 
the American eagle stamped upon them with a die. 

BANKS OF ISSUE. 

T. We have already noticed the rudimentary form of the 
banking system as it is authoritatively given in the Gospel of 
Luke (xix. 23.) Another allusion to it is found in Matthew (xxi. 
12), where the "money changers" are found exercising their trade 
in the temple at Jerusalem. In the former instance the business 
is styled banking, and the description is of a bank of deposit pay- 
ing interest, and, of course, lending the deposits at a higher rate, 
as is the usage of the simplest form of savings banks in our own 
time. The money changers of the temple seem to answer to our 
brokers. From the necessity of such functionaries, wherever 
money has been in use, we infer their existence coeval with the 
exchanges of business traffic in times long before the dates we have 
cited as matters of familiar historic record. Borrowing money 
upon mortgage security is mentioned in Nehemiah (v. 3-11), 415 
years before the Christian era; whether from private bankers 
or from partnerships, authorized by public law, is not stated 
but the instances admit of either form of brokerage. 



172 POLITICAL ECONOMY. 

After the Christian era, about the 8th century, in the time of 
Ilaroun Al Raschid, banks and bankers are spoken of as existing 
in Persia, India, and Arabia, just as they are spoken of in England 
in the reign of Charles IL, A. D. 16G0-1685. 

But through the inexactly distinguished or bordered, dark, and 
middle ages (the period from the fall of the Western Ronaan Em- 
pire in the 5th century (476), to the latter part of the 15th, by 
some fixed at 1453, the time of the fall of Constantinople, by others 
at 1492, the date of the discovery of America), such institutions 
as we now call banks of issue had not come into existence. In 
fact, the first of these establishments or companies was the Bank of 
Sweden, which commenced the issue of bank notes proper in A. D. 
1658, that is, promissory notes payable to bearer without endorse- 
ment, of uniform amounts, fitted for general circulation. 

The Bank of England, which went into operation in 1694, in 
the reign of William and Mary, issued notes of very limited circu- 
lation, in denominations of 50 pounds ($250), and upwards. These 
could not be called a common currency. Although having the 
form of circulating notes they were, in effect, rather certificates of 
credit than a money of currency. 

P. But were there no circulating notes in convenient forms and 
denominations for common use before the end of the 17th century ? 
Gunpowder, the mariner's compass, the art of printing. National 
debts, post-offices, were in existence then ; and Spenser, Shak- 
speare, Cromwell, Milton, Locke, and Bunyan had lived and il- 
luminated the time ; and Newton, Defoe, Addison, Pope, and 
Berkely were born before the bank note was made a medium of 
exchange ; and Dr. Johnson, David Hume, Goldsmith, the family 
magazines, encyclopedias, and the modern newspaper started into 
full life in the immediately preceding generation. 

T. Civilization, or in better pWrase, well ordered association in 
communities, must needs have attained considerable advancement 
before the best instrumentalities of social and business interchange 
could be invented. Discoveries of great practical use arise out of 
the conditions that demand them and can use them. That is 
the key to all the preferred and permanently used facilities of 
commerce. 

Tlie invention of bills of excliange is commonly attributed to the 



BANKING. • ■ 173 

Jews in the middle ages; only, I suppose, "because these people 
were dispersed among all the progressive nations of the earth ; 
and being held together for all purposes by unity of faith and 
interest, they were in the circumstances to make of themselves a 
universal bank or association of bankers ; and were well fitted for 
that function by the marked characteristic that they have ever 
been dealers in money, as distinguished from producers and dealers 
in other commodities. 

These bills of exchange were written drafts, cheques, or orders, 
made payable at considerable distances from the places of issue, 
commonly in foreign countries. They secured payments without 
the transmission of coined money, just as bank notes do within 
the range of their circulation ; but they differed from the bank 
note in that they were orders for payments in bulk, that is, for 
round or indivisible sums of money, and, in consequence, were 
only suited for mercantile transactions or remittances of specified 
amounts, and were not adjusted to such a varied number of pounds, 
ducats, or dollars as are required for ordinary business payments. 

These bills of exchange could be make payable on demand, as 
our ordinary bank note is, or on time, as a post note is. Thus 
they were not much unlike the larger bank bills at first issued by 
the bank of England. The circulating bank note, intended for 
domestic commerce, was thus prefigured and suggested by the bill 
of exchange, which still serves the purpose of foreign commerce, 
by its special adaptedness to that service. 

P. The Jews, I suppose, got the credit of the invention from 
the circumstances that they had their correspondents everywhere, 
and had their inducement, in the profit of the business, to engage 
in the sale of exchanges more extensively than others could. The 
employment of the like mode of effecting payments abroad would 
naturally occur to any merchants and money dealers who had for- 
eign correspondents at command. Many reputed inventors of 
other conveniences, have no other tide to discovery than an effec- 
tive and general introduction of their machines into common use, 
if we may credit the usual disputes and contests of claimants, 
which occur even in the sciences, arts, and literature. 

D. The Bank of Venice was founded in A. D. 1171 ; the Bank 
of Barcelona in 1101 ; and the Bank of Genoa in 1407 : all of 



174 POLITICAL ECONOMY. 

them several centuries before the Bank of Sweden, and that of 
EngLind. 

T. These institutions called banks, were for the most part cre- 
ated for, and served only as, fiscal agents of the governments 
which established them. They united with this political service, 
in several forms and degrees, the office of banks of deposit, but 
did not otherwise contribute to the convenience of commerce, or 
the ordinary service of the people. For instance, the earliest of 
these, tlie Bank of Venice, was based upon a forced loan of that 
aristocratic republic. Funds deposited in it could not be with- 
draAvn, but the property in them was transferable on the books of 
the bank at the pleasure of the owner — a sort of stock subscrip- 
tion, diflfering in nothing important from the relation of a stock- 
holder in a modern corporation. The subscriber, or his assignee, 
derived his profit from the premium which these inscriptions of 
credit commanded above the current coins, which were greatly 
depreciated by clipping, wear and tear, to which they were sub- 
ject, and which often reached ten per cent, of their nominal value ; 
and he received interest upon his stock or deposit guaranteed by 
the government. These conditions made the investments popular, 
as they were profitable and safe. The rate of interest is stated at 
4 per cent., which was far below the customary charge of that day, 
but the stockholders were indemnified for the difference by other 
advantages. 

By the way, perhaps the earliest instance of the foundation of 
a national debt, is found in the creation of the Bank of Venice. 
The policy and the conduct of the bank was of course modified in 
the course of lime by increasing the service of which it was capa- 
ble. It continued in existence and beneficial operation 626 years 
without interruption, till the overthrow of the republic in 1797 by 
the revolutionary army of France. 

F. It is stated that these bank credits went sometimes up to 
30 per cent, above the par of the coin then in use. How could 
that be possible ? Does it not indicate a fearful influence over the 
interests of the public by such a national bank ? 

T. The premium did go as high as 30 per cent, over the cur- 
rent coins, until the government limited it by decree to 20 per 
cent., at which it continued permanently fixed so long as the bank 



BANKING. 175 

existed. In the light of this fact, think of a supposed standard 
of value. 

The unit of the money of account was the ducat. Venice had 
a gold coin of that name which was held in high repute for its 
purity. Don't ask me what it was worth. Nobody knows. Cer- 
tain it is, that the quality of this coin could not have been in any 
way concerned in the agio or premium, for no coins passed in the 
transfer of the bank. Values were not measured by them. They 
were measured by the money of account. 

P. Could commercial business be conducted for 600 years 
upon credit estimations alone without being gauged by money in 
substance ? 

T. It was done so ; else the system which had no standard in 
metallic money could not have been maintained through half a 
dozen centuries in the grandest mart of commerce existing in the 
middle ages. It was done as the vast business of the present day 
is done, by set-ofi. In the clearing houses of London and New 
York, hundreds of millions of debts and credits are settled every 
"day with balances not exceeding five per cent, of their totals, and 
even these balances not paid in money. They are met the next 
day by claims which cover them. It is all credit. Surely, if the 
whole community of business people could get their credits set off 
against their debts they would not need, at the utmost, to receive 
more than their profits in money, and only a fractional part of 
these profits for current expenses that cannot go into clearing- 
houses for balancing. The business exchange, through any means 
or medium, is at bottom, nothing but barter by indirection. Aiiy 
money of account is better for this purpose, and eflFects its ends 
and objects with less trouble and expense, than gold and silver 
can do. 

P. The wonder-working of the clearing-house by means of set- 
off is clear enough in statement. It seems adequate, and the 
understanding can grasp it as well as numerals represent millions 
and myriads of quantity ; but one must be familiar with the idea 
before it serves at every application in resolving difficulties, es- 
pecially when it displaces and reverses preconceptions of values 
in exchange. But how does this set-off agency bear upon the sur- 



176 POLITICAL ECONOMY. 

prising problem of the agio in favor of a credit or ideal money 
over the tangible instrument of commerce ? 

T. In the process by set-off — that is, in the balancing of debts — 
the instrument, or medium, or means must hold the rank of a 
standard. Shake yourself free from the notion that any particular 
medium or convenience of any one kind is intrinsically and exclu- 
sively the equivalent of a debt or of a purchase price. If any 
one Avill pay your debts and expenses by exchanging them for the 
debts or income due to you, are not the mutual accounts settled 
and extinguished without anything passing between you that is 
called money having either an intrinsic or representative value ? 
You may use a medium for this purpose, but by set-off you go 
farther and fare better, by getting rid of the medium itself. You 
get back to barter, which is the soul and essence of commerce. 

The credits of the Bank of Venice were par in payment of all 
debts, absolute and unquestionable. Gold and silver even quoted 
at the par of the bank inscriptions were not nearly so convenient. 
This high grade of the bank credits was one of the elements of 
the agio, or premium, which they carried. 

P. But it would be a very inconsiderable one in the great sum 
of the premium if the current coins were worth their nominal 
value in the ducats of the bank's money of account. 

T. That is just where the other element of the premium comes 
in, an accident or condition to which all metallic money is more or 
less exposed, for it has a variable exchange value. Beside the 
ordinary causes of change in the price of the precious metals, 
due to their varied cost of production, Venice, during most of the 
lifetime of the bank, had a world-wide commerce. For nearly two 
centuries — 1096 to 1290 — it was a station of the Crusaders of 
Western Europe, and all the coins of Christendom were poured 
into her market. These coins were of every imaginable mintage, 
and, besides, were debased and worn so much that all the skill of 
an expert was required to settle their value. For common use 
they were scarcely passable. They had lost the basis quality of 
money — its convenience. An English writer of the 17th century 
said : " The inconvenience and mischiefs that the currency of dipt 
and counterfeit money necessarily occasions are so manifest to 
everybody that it is as needless to point at any of them as it is 



BANKING. 177 

impossible to enumerate them all. It violates all contracts, and 
alters the measure of trade, breeding confusions in all commerce, 
etc." 

Indeed, the nuisance of a coin currency was the impulse, above 
all others, that set Europe in the 17th century upon the enterprise 
of establishing banks of deposit, in which the coins might be 
placed, once for all, out of the reach of the clipper and sweater, 
protected from the abrasion of use, and safe from debasement, 
only too frequent, by the governments. ■ A 20 per cent, pre- 
mium upon the bank credits over such a motley hoard of trash, as 
all these causes would bring upon Venice, taken along with the 
valuable service of the bank, in the security and negotiability of 
its credit money, is credible enough to any one who has ever 
handled a defaced Spanish quarter, or eighth or sixteenth of a 
dollar piece. 

P. The history of banking as you present it provokes inquiries 
which, perhaps, do not fall into your train of thought, and I hesi- 
tate to divert you by questions that may not be relevant. 

T. I do not occupy you with a history of banking. That you 
must look for in books and treatises written with that intention. I 
only notice facts that serve to elucidate the theory of currency, 
and so endeavor to keep within the limits of our discussion. Only 
too much of narrative invades our line of remark. I wish to im- 
press upon you the uses, the conveniences, and the adaptedness, of 
the mediums employed in the exchanges of business. 

You will notice the fact, for it is important to us, that the Bank 
of Venice, by a forced loan of the government, made the public 
debt thus contracted the basis of the currency of the Republic, and 
that although the process was despotic and had in it the nature of 
wrong, it at last adjusted itself happily and beneficially to the 
best service of the community, and came in good time to command 
the acquiescence and cordial support of all the parties concerned. 

A striking coincidence occurs in the history of our first United 
States Bank. Let me give an illustrative incident, in brief: — 
When General Washington was on his way to his first inaugura- 
tion at New York he met Robert Morris, the financier of the Revo- 
lution, in the presence of Bishop White, in Philadelphia. Im- 
pressed by the great question of the time, he said to Mr. Morris, 



178 POLITICAL ECONOMY. 

" What can be done with our terrible debt? (terrible for the time 
and circumstances of the new government — it was fully 7o millions 
of dollars). Mr. Morris replied, " Having frequent occasion dur- 
ing the war to consult Colonel Alexander Hamilton upon the most 
efl'cctive devices for meeting the exigencies of the time, allow me 
to refer you to him for an answer to your question." Washington, 
not a little surprised at so confident and so respectful a reference 
to his private secretary (his amanuensis ; a youth who had only dis- 
tinguished himself as a field officer and tactician), by the most com- 
petent adviser that could be found, immediately called Hamilton 
to a conference, and bluntly put to him the question, " What shall 
we do with our terrible debt ?" " Bank on it," said Hamilton ; 
" our debt is the only capital that we have, and is the best of all 
securities for a banking basis — the faith of the nation, and through 
that faith, the whole property of the nation and all the prospects 
of the country, is an unquestionable pledge of eventual solvency; 
and will be immediately and concurrently an instrument of the 
common business of the people needing such aid and support." 

The issue vindicated the policy fully, and even far exceeded 
the expectation of the great projector. 

Do not forget, or pass lightly over these instructive experiences, 
but carry them with you, as correctives, in your estimates of 
credit-money, ideal money, money of account, rag-money, and 
promises to pay. 

Adam Smith compared paper money to a wagon-road through 
the air, in contrast with a solid, substantial road upon terra Jirma, 
or a medium of the precious metals. The electric telegraph and 
the telephone are as much exposed to whatever there is in the 
comparison, and, for aught I know, the balloon may at last fall into 
the same predicament. 

The American government, having no practicable track for its 
financial travel on the solid ground of a money pavement, resorted 
to the airy substitute, and somehow effected its deliverance from 
its great despair, and from the dissolution of the Union, through 
financial bankruptcy. The man who divined the situation and 
the remedy, who, in the language of Daniel Webster, "touched 
the dead body of the public credit, and it started into life," was 
made Secretary of an empty Treasury, and within a period that 



BANKING. 179 

was measured by months, not by years, established the credit of 
the new-born nation, so perfectly that he was able to borrow all 
the money that he needed in Europe, upon terras as favorable as 
any established government in Christendom could secure. The 
condition of living by faith, even in material things, is, keep the 
faith, fight the good fight, and the crown of victory is assured, 

I). You seem determined to shake the maxim: " Pay as you 
go," from its position in pecuniary afiairs. The examples cited 
seem to have that rather questionable tendency. 

T. You seem not to be able to get rid of the idea that gold and 
silver are the only substantial money medium, or, at least, the 
only sure basis of a credit system. In this, however, you are im- 
plicitly following the doctrine of the " Father of Political Econ- 
omy." Adam Smith says, oracularly, that " the total paper 
■money which can circulate without injury in a country, can never 
exceed the value of the gold and silver of which it takes the 
place, and which, if commerce remained the same, would circulate 
there if there was no paper money in circulation." 

B. Worse and worse! You would make me a heretic to the 
established creed. Apostasy is apt to call itself liberty, and par- 
don me, sir, there is some audacity, as well as some insecurity, in 
thus throwing off the guidance of commonly received opinion and 
venerated authority. 

BANK OF GENOA. 

T. I suppose the Apostles were right in resisting the Pharisees, 
and, that pernicious theories in any department of thought ought 
to be repudiated. But, to the point of your repugnance. I am 
not opposing the policy of " pay as you go," if credit money 
really is payment ; and I am right in saying that law and custom 
both hold it to be so. 

Some shallow adviser induced General Jackson, when he was 
in his fury against the rotten bank system of the States, and 
especially against the ill-conducted United States Bank, to say 
that " those who live by borrowing ought to break." To which 
the reply offers itself, that a man without capital must never ob- 
tain any upon the pledge of his integrity, industry, and capacity; 



180 POLITICAL ECONOMY. 

that is, to be bom poor is to be doomed to beggary. Fathers and 
heroes are not always inspired, and the world cannot stereotype 
the wisdom of any generation of men, until they bring in the 
millennium, in proof that they are right, and always right. 

I). I will drop the debate if you Avill not construe my silence 
into assent. 

T. The Bank of Genoa was founded A. D. 1407, after a long 
period of civil, social, and monetary disturbance. The finances of 
the State were in a wretched condition. Unlike the Bank of 
Venice, its capital was furnished by voluntary subscriptions, in a 
clear perception of its promised advantages to the State and to the 
business people. The contributors did not, as in the case of the 
Bank of Venice, repose their faith in the Government. They in- 
sisted upon the best securities which it could give them for all 
advances made to it. They organized the best checks which they 
could devise against its encroachments, and held within their own 
hands the power and direction of the bank's management — a con- 
trolling influence which they maintained through generations of 
foreign and civil wars. The interest of the money lent to the 
Government was secured to the bank by the assignment of taxes, 
customs, and other incomes of the State; and thus, the stockholders 
were assured of the dividends which the business afforded. 

The lire was the unit of the money account, which was held 
very closely corresponding to the franc of France, worth at our 
mint valuation about 19|^ cents. As a significant instance of the 
caution observed in the management of this bank, the forms of its 
books were rigidly prescribed, and these records were annually 
transferred to another office, out of the hands of its officers, and 
subjected to inspection and explanation. These regulations were 
enforced for centuries. The private bankers of the city, also, were 
placed under strict regulations. The bank shares and deposits 
were exempted by law from attachment, for either public or private 
claims. 

I have given these, otherwise unnecessary details, for the pur- 
pose of showing that this great money institution was treated as a 
subordinate branch of the civil government, notwithstanding its 
general independence as a private property ; that the common 
money function might be as well guarded for the benefit of the 



BANKING. ISl 

public as any othei- interest of the community, on the ground that 
the provision of circulating money, and its administration is, and 
of right ought to be, a government duty and prerogative. This is 
a point Avell worthy of consideration. 

P. In this respect the former practice of our Federal Govern- 
ment seems to have been strangely remiss. It took care that the 
materials and weight of our coins should be governed by a uniform 
national law, but left the regulation of banks of issue to the juris- 
diction of a quarter of a hundred separate States in the Union, 
which acted without concert, and generally without prudence, in 
empowering their local banks to produce what effect they might 
upon the paper currency. 

T. By establishing the National banking system which has 
worked so well in the last 18 years, and by taking the State banks 
out of existence as manufacturers of paper money, the United 
States government aroused itself to the legitimate exercise of its 
proper sovereignty ; confining the circulating note to its own super- 
vision, and with the greenback issues taking the absolute and ex- 
clusive control of the currency in paper, as it always had done in 
respect to the coinage of the precious metals. 

To continue our history of the progressive forms of banking we 
must further consider the history of this Bank of Genoa. It some- 
what enlarged the sphere of service to the commercial community 
by providing notes that could be used in the larger transactions, 
and by otherwise relieving the transfer of funds of tedious and 
troublesome formalities. It did not emit bills of small denomina- 
tions, nor for uniformly fixed or graded amounts, but in sums re- 
quested by the persons accommodated. This is not what we un- 
derstand by circulating notes. Our forms of the bank note were 
not yet reached. Such issues were in effect only due-bills or cer- 
tificates of deposit, and, I believe, were written by the officers, 
and of determinative and unequal denominations. 

P. The public must have had pocket money and pieces suited 
for use in form of coins for their smaller purchases and payments. 

T. Of course they had. But the inconvenience of carrying 
coins about for the necessary purposes of trade is obvious. It is 
among us manifested by the fact that the Secretary of the Treasury 
finds it impossible to keep any considerable amount of silver afloat 



182 POLITICAL ECONOMY. 

in the face of onr small note circulation. Two-thirds of the dollar 
pieces which the mint has been coining under a compulsory act of 
Congress lie corded up in the Treasury vaults, while certificates 
of deposit are made to represent nearly one-half of them in busi- 
ness. Even the fractional, or as they are styled, subsidiary coins, 
arc encumbering the Treasury safes. People will not make pack- 
horses of themselves in the service of a so-called real money. 
They may wish to be assured that it is in the vaults of the banks 
for the redemption, or rather for the insurance of their notes, upon 
the practical principle that if the banks have it their note-holders 
don't want it, and if the banks have it not the note-holder will 
insist upon getting it. 

You may have endorsed a promissory note to meet the require- 
ment of a money-lender, and never heard of your liability after- 
wards. That is exactly the service rendered by any surplus of 
coin in the country beyond the pocket money supply for every- 
day expenses. The payment of balances of foreign trade may 
demand bullion, but that commodity should never be allowed to 
encroach upon the provision of coined money of the realm. 

P. You say that the Bank of Genoa had not made of itself a 
common commercial agent for over 266 years of its existence — 
not until 1673. How or in what manner was its public service 
extended at that time ? 

T. That common nuisance, the coinage of divers mintages, the 
fraudulent deterioration, and the diminished value, by wear and 
tear, which Avas the plague of the Middle Ages, and of all the 
periods afterwards, before the substitution of the circulating note, 
made foreign exchange, and especially domestic commerce, a griev- 
ance that pressed for a remedy ; and, as I have said, was among 
the most forcible motives which induced the establishment of banks 
of issue. The great expansion of the maritime and domestic trade 
in the 17th century imperiously demanded a systematic order of 
money exchanges. The republic granted to the bank the neces- 
sary powers, and went even a step farther than thus gratifying 
that institution. It made all bills of exchange of any amount, and 
all other debts over 100 lires (or francs) payable at the bank, — 
tiius making it a great central clearing-house of all debts and 
credits above this minimum. At the same time the transfers of 



BANKING. 183 

its deposits and of the shares of its stockholders were relieved of 
troublesome, and, in some cases, almost impracticable, conditions. 
The changes effected made the bank a sub-medium of the money 
system which put all the more considerable transactions of com- 
merce under an organized central machinery, but left pocket- 
money loose in its own vagrancy ; or, allow me to say, left hard 
money to perform its hard service as best it could. 

I). You are preparing the way for the advent of bank notes by 
a constant exhibition of all the ills that coins are heir to. 

T. It is their inherent, more than their accidental ills, that 
compelled the resort to a remedy. Their weight, bulk, difficvilty 
of safe keeping, variable value of their metal ; their special lia- 
bility to counterfeiting, to clipping, sweating, plugging, and abra- 
sion, stick to them like original sin and actual transgression. For 
ostentation they jingle well, and for glitter they are attractive ; 
still, however, I admit that they are great in little things, which 
is not a little thing to be and to do. 

P. Q^he Genoese, then, had in use two kinds of currency, of 
very unequal value, under the same denominations ; and, curiously 
enough, the coins, and not the paper, were at a discount. 

T. The circulation in coins and the money of common accounts 
was called fuori banco (out of bank money). The bank money 
was called volute banco, which was always at a premium, because 
of its better ascertained and more available exchange value, and 
of its greater convenience in its special use. We also had a 
difference in values under the same money-names, when our cir- 
culating notes were depreciated. They were commonly called 
currency, to distinguish them from gold and silver, which were 
then demonetized, and were a marketable commodity of variant 
price in currency; the premium upon gold ranging, during the 
suspension, from one to one hundred and eighty-five per cent. So 
much for standards of value in money theories. 

It remains to be noticed that the bank-bills of Genoa were only 
substitutes of notes for coins. They did not add anything to the 
amount of the existing currency. 

P. You say that the coin deposits in the Bank of Venice were 
not reimbursable to the depositors. How is that ? 

T. I should have said that the money of the contributors to 



184 POLITICAL ECONOMY. 

the capital of the Bank of Venice Avas not a gift or a tax in effect; 
nor yet a loan, of which the principal was to be replaced at a 
time specified, or at any time. It was a subscription or invest- 
ment, like that in the British consols, amounting now to over 5U0 
millions of pounds sterling, which do not take the name or char- 
acter of a debt redeemable, or of a principal payable to the 
lender, but is distinctively called a perpetual annuity ; because 
under the terms of the loan, the government has only bound itself 
to pay 3 per cent, per annum upon a sum equal to every hundred 
pounds credited to the holder. The government is under no con- 
tract obligation ever to return the principal. The ownership of 
the claim for the annual interest is transferable. The stock or 
fund, as it is called, is always salable, but at variant prices. The 
nominal hundred pounds-worth at one time sold as low as 54 per 
cent., which raised the interest payable upon the investment 
nearly equal to 6 per cent. Half a- dozen years ago this fund 
sold at about 93 per cent. Very lately it has been up to 99, and 
even to par. These more ordinary rates depend in great part 
upon the rate of interest which money carries in the market. The 
lowest rate mentioned was occasioned by the threatened insolv- 
ency of the exchequer, or its probable necessity for borrowing 
large sums at a heavy discount during the war with France. 

P. Do national debts sometimes represent a larger amount than 
the money received from the lenders? 

T. Nations have a ruling policy of not paying above a certain 
nominal rate of annual interest, and when they cannot borrow at 
that rate, they must take as much less than a hundred for the 
hundred acknowledged, as will bring the interest upon the sum 
received up to the current rate. For instances: — 

Great Britain borrowed in the years 1781, 1782, 1783, and 
1794 .£43,500,000, for which she issued stocks amounting to 
jei35,248,000, nominally at 3 and 4 per cent., with terminable an- 
nuities added. Here was an aggregate of principal debt sold at 
83 J per cent, discount. Oif a large amount of loans created in 
1812, 1813, 1815, nominally issued as three per cents., she re- 
ceived so much less cash as brought the interest on the money paid 
into her treasury up to 4| per cent. ; and in 1847, 1855, and 1856, 
she issued stocks to the amount of je34, 000,000, at 3 per cent., 



BANKING. 185 

for which she received but ^£30,315, 500 — a discount upon the 
principal of 10.9-1 per cent., bringing the actual interest up to 
3.37 per cent. 

In our own troublous time — the year 1861, with the Rebellion 
on our hands — Mr. Chase, Secretary of the Treasury, sold 6 per 
cent, loans to the amount of $60,409,000, for which he received 
only $53,813,596, a discount of 10.91 per cent. 

P. Is there prudence or policy in such a system ? 

T. For the policy I cannot answer. It may be, or is, a fancied 
necessity, to avoid the announcement of an inordinately high rate of 
interest, and the discount suffered may be concealed or not alarm- 
ingly estimated ; but when the principle or the debt comes to be reim- 
bursed at its exaggerated amount, and when the real rate of interest 
that runs upon it are counted up together, the illusion of a nomin- 
ally lower rate of interest will be seen, if not felt. For a long 
time the French rentes were sold at Q^, which the Government must 
at last refund at 100, and in the mean time pay 3 per cent, per 
annum upon the fictitious 34 in her account. There must, I sup- 
pose, be something in this policy which has induced its adoption 
so generally. 

P. National debts ! They usually hold a higher character than 
any others. But are there no historic instances of States who 
have failed to redeem their pledges ? 

T. Only too many are on that record. Some because they 
cannot, others because they will not. Some of the States of this 
Union have repudiated their debts, and counties and cities have 
done or endeavored to do the like, on one pretence or another. 
The late Southern Confederacy is utterly and hopelessly bankrupt, 
but its creditors ran the risk and took their chance. They must 
abide by their bargain under its obvious conditions. One must 
not quarrel with the horse he staked his money on because he lost 
the race. 

There is a form of virtual repudiation of State debts that we 
have heard too much of. Hamilton nobly resisted the effort to 
disavow the obligations of the Revolutionary Government, to the 
extent that it was contracted in the depreciated currency and high 
prices of the darkest day of the great struggle for our National 
independence ; and there are those among us who urge the like 
13 



186 POLITICAL ECONOMY. 

abatement of our debt, contracted in the time of the late rebellion 
of the Confederate States, on the same grounds. They are indif- 
ferent to the fact that the price paid for National bonds was the 
best that could be got for them in the then state of the Nation's 
credit; and above all, they forget, that the original purchasers did 
contribute to the support of our armies in the money of the time ; 
and, over and above all other considerations, they do not hesitate 
to violate the faith of the Republic, pledged for the payment of so 
many dollars as are named in the bond. The cry of bloated bond- 
holders cannot exonerate National perfidy. King David, who was 
in position as much above the municipal law as any sovereign state 
can be, describing those who shall never be moved, but shall abide 
in the tabernacle of the Lord, and dwell on His holy hill, is par- 
ticular to include the very strong case of him " who sweareth to 
his hurt and changeth not" (Psalm xv. 1-5). The fathers mort- 
gaged the inheritance which we hold from them with the incum- 
brances for the necessary and unavoidable expenses of its improve- 
ment and defences. Their last will and testament reads thus: — 
" After all our just debts are paid, we give and bequeath all the 
estate of which we may die possessed, real, personal, and mixed, 
to our children ;" and we are bound to take the estate on these 
conditions, else we allow the testators to be buried as bankrupts 
at the expense of their creditors. 

BANK OF AMSTERDAM. 

T. Let us return now to the history of banking at the stages 
of its advancement in principles and policy which may afford us 
the required instruction of a careful inquiry. The Bank of Am- 
sterdam, founded in 1609, has in its conduct and fortunes, a 
curious and instructive revelation of the governing principles of 
banking, and of currency as well. In the 17th century, Holland 
was in fact the first naval power of the world, and the largest in 
maritime commerce. She disputed and divided the supremacy of 
the ocean with England. In 1667 a Dutch fleet sailed up the 
Thames and blockaded London. It is true Cromwell was then 
gone, and one of the most incapable and meanest of the Stuarts 
was on the throne ; but from the close of the 16th, throughout 



BANKING. 187 

the 17th century, Holland held the principal seat of commerce in 
the Indian archipelago ; and it was a saying at the time that all 
the world was clothed in English wool woven in Flanders. This 
indicates the vastness of its commerce, foreign and domestic, and 
the consequent employment of the common medium of purchase 
and sale. The policy of Cromwell between 1658 and 1658, and 
the equally sound and wise administration of the industrial inter- 
ests of France by Colbert, nearly at the same time, greatly 
diminished the economic rule of the Dutch in foreign trade, until 
the imbecility and misgovernment of Charles XL of England, and 
the foolish tyranny of Louis XVI. of France, in the latter years 
of his reign, forfeited the advantages that wiser councils had 
secured up to the middle of the century, and a few years later. 

The intolerable nuisance of the coin currency, as elsewhere, 
compelled the adoption in the Netherlands of the better currency, 
and as usual in all progressive movements affecting business com- 
munities, the first advancement in the money policy was made for 
the relief of the wholesale trade, and the Bank of Amsterdam, for 
lono" after its establishment must be described as a bank of dis- 
count and deposits, but materially modified upon the plan of its 
predecessors. Gradually some of the main features of a per- 
fected credit system were infused in the framework of the deposit 
banks of the earlier time, and for a while, they held a middle 
place between the hard-money and the systematic paper medium 
scheme of payment — between touch and trust, in the business of 
exchange. 

P. In this stage of development, were not such payments vir- 
tually only a mere transfer of the ownership of certain quantities 
of coins, and so, another method of hard-money payment, without 
adding anything to the available stock of the currency ? 

T. Under this system, only so much of a credit system obtained 
that the convenient transfers of the property in the inactive coin 
money required the faith of the parties using it, was necessarily 
given to the actual existence of the redemption funds ; but that 
the idea of its existence answered, as well as the substance repre- 
sented could do, we have the most conclusive evidence in the sub- 
sequent history of this institution. 

B. It is easy to understand that speculators in fancy stocks can 



188 POLITICAL ECONOMY. 

buy and sell shaves which they know do not exist, on the phin of 
paying ov receiving, at a future day, the difference of the price 
in their market — wagering that they will go up or down in the 
broker's auction, just as they might play at hazard in moonshine 
— but, how can business men be induced to risk their interests upon 
airy nothings, sported by legally organized public corporations 
whose debts and promises to pay should be realities, but are not ? 

T. Facts are not to be disputed because difficult of explanation. 
They are not theoretical fancies ; and, I submit for solution, the 
established fact that the Bank of Amsterdam, holding the best 
reputation for solvency, and sustaining it by the strictest punctu- 
ality in meeting all claims for nearly two hundred years; effect- 
ing exchanges estimated at five tiiousand millions of dollars per 
annum, and with great commercial benefit to the city of Amster- 
dam and its multitude of customers, was, in the year 1790, discov- 
ered to have squandered all its capital full fifty ^^ears before ! — yet, 
for that half century, bad performed the functions of a money 
agency just as well with the reputation of a capital which had been 
abstracted as if it had all the while held it in gold and silver in 
its vaults. What difference in use can there be between an un- 
employed or hoarded dollar, and a reliance upon a non-existent 
dollar ? 

D. You mean, of course, that a security is not brought into 
actual service until its promised performance is called for. Yet I 
cannot admit that a fraud, a hollow falsehood, is as good as a fact, 
a thing truly what it purports to be. 

T. Neither do I. The instance cited is only used to show that 
a shadow can serve instead of a substance, and serve as well in 
pecuniary dealings, until the disappointed touch dispels the illu- 
sion — that a good actor may very effectively personate a veritable 
hero. Image worship, in acceptable representatives of the un- 
seen, is not unusual in any kind of human doings. Faith is an 
effective factor in all the uses of credit, and we can all the better 
understand its uses by looking into its abuses. A picture makes 
a good report of a face or of a landscape, though it is really neither 
of them. 

That the Amsterdam bank was fatally mismanaged is proved by 
its catastrophe, for success is the true rule of judgment in matters 



BANKING. 189 

of policy and expediency ; but it is, also, clear enough that there 
was no fraud in its conduct. It lent its entire capital to the States- 
General, to the East India Company, and to the city government 
of Amsterdam, — all good customers, and all solvent, but neither 
of them able to make instant restitution in time to support the 
credit of the institution. (It is not a little remarkable that, with 
the example of the banks of Venice and Genoa before it, it had 
not made the principal of these debts transferable.) The bank 
was in verity solvent, all the time that it was bankrupt in the 
means of meeting the subsisting demands of its stockholders and 
creditors. If it only could have substituted, as occasion demanded, 
the credit of its principal debtors for that of its own exhausted 
coffers, it would have been safe. The bank really had the money 
to meet all its engagements, but had it not in its own hands when 
the emergency came upon it. Like the foolish virgins of the 
parable, the lamp which it carried had gone out, and the time did 
not serve for replenishing it, notwithstanding it had in reserve the 
purchase price to buy the oil that might have kept it burning 
and shining for another series of centuries. 

P. In this story, telling strongly, as it does, of the power of 
the credit system, there lurks a per contra charge of its risks. If 
the governments which borrowed the bank's capital could not 
refund it in the hour of need, they were just as impecunious at 
all other times in the interval. 

T. Governments are always out of cash when they are bor- 
rowers ; but they are not, therefore, out of credit, which is evi- 
denced by the fact that they are able to borrow. They pledge in 
security the faith of the nation, which is always, under some con- 
ditions, convertible into the means of payment in ordinary busi- 
ness transactions. Their bonds are anticipations of future, but 
available, resources. They are the strongest examples of the 
credit system. The common faith in the faith of the nation 
becomes to the people " the very substance of the things hoped 
for." 

P. Oh, I see. If the bank had held the government debts as 
transferable, and used them so in its current transactions, all 
dealers, willing to purchase parts or shares in that fund, would 
have taken them in liquidation of their claims, or the bank could 



190 POLITICAL ECONOMY. 

have sold them even at a profit, and so have replenished its coffers 
and restored its loaned capital. But it kept these loans, which 
abstracted its whole capital, secret. 

In the last (|uarter of the last century the universal political 
disturbances on the Continent of Europe threw doubts upon the 
faith and solvency of the f!;overnments ; and it was, perhaps, not 
f^ood policy to risk the credit of the bank on the insecure security 
of thrones and dynasties that were everywhere in peril. 

Things have changed. The nations that are stable in their 
polity now pul)lish their debts without reserve ; and, I suppose, 
that the ca})italists wlio invest their money in the bonds of the 
United States, intonding to replace it by an immediate and profit- 
able sale of the national debt, are not, in intention, mere money 
lenders, waiting for their reimbursements for twenty, thirty, or 
forty years, but are only traffickers in the fund. 

T. There are some otlier things in the history of this bank well 
worthy of notice, but I can now refer only to one of them : The 
market of vVmsterdam was gorged with a coin currency flowing in 
from all (piartcrs, and of all kinds, which was terribly depreciated, 
in the average Id per cent, below its nominal value. All foreign 
and domestic bills of exchange for sums over (JOG florins (jirobably 
about $450) were made payable at tlie counter of the bank. De- 
posits of coin with it were scrutiui/Zuigly tested, and the value so 
ascertained, less 5 per cent., was ])laced to the credit of the deposi- 
tors. As the premium upon the bank money was equal to this 
deduction, the owner of the coin was compensated for the deduction. 
The coins or bullion placed in the bank were not reclaimable in 
kind, but were locked up in the bank vaults. By law these credits 
were exempt from seizure or attachment. They were held sacred, 
in theory, for the money service of the coranuuMty. The govern- 
ment thus asserted its right and duty to protect the currency which 
it authorized. 

When it was found that the credit ])aj)er of the bank was larger 
than the market demand for it, the bank bought up the surplus at 
4 per cent. They had been sold by the baidc at a premium of 5 
per cent., and this practice of relieving the money market of their 
excess kept them steadily within 1 per cent, of their par price. 
A very similar provision in principle has been suggested by the 



BANKING. 191 

plan of making our National bonds inter-convertible with greenback 
notes, by funding the notes at a low rate of interest when they are 
in excess of the business demand, and restoring them again to the 
needed circulation ; steadiness and adequacy of the circulating 
money supply being the aim of the arrangement in both cases. This 
is a flexibility of great importance in addition to the other conven- 
iences of the money medium: a very simple contrivance, and a very 
practicable one, especially as a check to speculation. But we have 
not yet reached such perfection in the policy of the money supply. 
Dr. Rush believed that the spleen, which to physiologists had 
appeared to be a supernumerary organ in the human constitution, 
was a basin held by the hand of nature to withdraw the casual 
excess in the blood supply from the ordinary channel of its circu- 
lation in exigencies, and to restore it again when required for the 
uses of the general system in its normal movements. Such hints 
in nature are often directory in thought and practice in correspond- 
ing situations occurring in the conditions of social agencies. 

J9. The Bank of Amsterdam, among its otlier devices dealt in 
brokerage of its own debts. But the business of dealing in money 
seems to be a tampering with that thing which ought to be a fixed 
measure and standard of exchange, as sacred from alteration as 
bushels, steelyards, and yard-sticks. I don't wonder that Moses, 
15 centuries before the Christian era, forbade usury, as he explains 
the word, lending upon increase (Leviticus xxv. 26). 

T. Moses prescribed this law for a theocratic government, for a 
peculiar people in peculiar circumstances, and marked the exclu- 
siveness of its application by expressly allowing the Israelites to 
take usury or interest from strangers (Dcut. xxiii. 20) — from "the 
heathen round about;" and the survivors of that race have been 
always rather distinguished as money-jobbers. 

The emjjloyment of money in the business of earning money, 
hiring it for wages, is every way justifiable ; and when it thus 
enters the commodity market, it is as fairly subject to profit and 
loss as other commodities are ; for the effort to find in it an inva- 
riable value must be given up. Exchange being simply interchange 
of values, the subjects are incapable of estimation other than a 
relation to each other, and not a relation to some third or inter- 
mediate thing, as a means of measuring them. Money of account 



102 POLITICAL ECONOMV 



^ 



is the expression of values, and as such is the only true measure in 
exchanges. 

As to the point that troubles you — the brokerage by the bank 
of its own debts — there is so much of equity in it that it made its 
monev -worth 5 per cent premium in its ordinary movement, and 
redeemed it ^Yhen it was in excess, at a profit so small as did no 
more than pay the cost of the transaction ; and at the same time 
rendered the service of protecting their paper from falling below 
4 per cent, in the hands of the holders, as it might have done 
under the free dealings in it by speculators. This brokerage, as 
you call it, was a sure defence against black Fridays in the Wall 
Street of Amsterdam. 

BANK OF HAMBURG. 

T. In the history of the Bank of Hamburg, established in 1619, 
ten years after that of Amsterdam, we have another instance of the 
prevailing nuisance of the coins in circulation at the time, and of 
the compulsory substitution of a representative credit money. This 
bank had been in the practice of receiving the German rix-dollar 
at its face value, but the Empire issued a coin of the same name 
deteriorated ft per cent, in value. The effect was that the bank 
was compelled to stop its operations for a time. In 1770 it re- 
sumed business on a new unit of value, the mare banco; which has 
never had a coin representative, but as a money of account was 
worth about 32 cents, or one-tenth of the old English coin called a 
marc or mark. The silver pieces used in this bank money (47 
parts fine to one of alloy) were for a long while at a premium 
above the coins in general circulation of from 20 to 80 per cent. 

D. Twenty to thirty per cent, of fluctuation in the value of 
real money again in 1770, as in Amsterdam and in Venice, be- 
tween bank money and coins, four or five hundred years before. 
Even now among ourselves the legal standard silver dollar is 
(piotcd at about 12 per cent, below the par of gold and of convert- 
ible bank paper. What are we to do for a standard, by which we 
may know how much is the exchange value of the money in our 
pockets ? 

T. The African coast negroes, having none of the conveniences 



BANKING. 193 

of a medium of payment, and who thereby escape the fluctuation 
of its intrinsic value in contracts, are no better off than we are. 
One of them cannot be certain, for a day in advance, of the pur- 
chasing power over tobacco or muslin that there is in the yams in 
his bag. The landlord at Pittsburg, who, seventy years ago, 
granted leases for " the term of the existence of this world," did 
his best for his heirs by providing that the rent should be paid in 
Spanish milled dollars of a fixed weight and fineness, or their 
equivalent in silver, but he could not be sure how much of com- 
modities they would purchase, or how much debt they would pay 
in the following generations. 

P. The history of coined money seems to be full of perplexity. 
The silver in the Roman penny piece, mentioned in the New Test- 
ament, Avas, fifty years ago, valued at seven pence half-penny 
English sterling; silver being estimated at 60 pence per ounce 
troy. It is not worth nearly that amount in their money of ac- 
count now. Coins, because they have an intrinsic value, are 
regarded as better for hoarding than bank notes are, but one can- 
not be certain of their value in exchange when they shall be 
unearthed. I have been amused when, since the resumption of 
specie payments, I have received a quarter or a half dollar minted 
before December, 1861, and evidently hid away for its greater 
certainty of value, for about 18 years, and find it sneaking back 
to its duty at a loss in its estimated value of sometimes 12, some- 
time 20 per cent. The "almighty dollar" has not the theolog- 
ical quality of the nunc stems; it is manifestly not safe from 
" variableness neither shadow of turning ;" it is rather that other 
thing — " all things to all men." 

T. Let us not laugh at it, nor at the meretricious qualities con- 
ferred upon it by theorists. It is, after all, the very life-blood of 
the business organism ; a little thinner and less nutritious, a little 
quicker or slower in circulation, at times, but still the great dis- 
tributor of the supplies required for the maintenance and growth 
of our material interests. Solomon did not overstate the work of 
its service when he said " money answereth all things." 

P. I derive from the facts presented, and fully supported by 
our own observations, that, however well coined money may suit 
the purposes of small transactions in retail trade, it does not 



194 POLITICAL ECONOMY. 

conveniently serve in the laro^er operations of business, and, not at 
all in foreign exchange, at its nominal value. 

T. The precious metals, in the form of bullion, are proper sub- 
jects of foreign commerce, but the coins of the realm, re^iuired for 
domestic use, are oat of place in that trade. 

The Bank of Hamburg is still a living and useful institution. 
Its service is that of making the precious metals available in pay- 
ments to the utmost extent of which they are capable, while 
avoiding their inconvenience and abuses. There is room and 
place for such corporation, without the more generally associated 
issue of circulating notes, in every large business city. Some 
such have always existed, proving their necessity. 

P. These older banks, which we have been considering, may 
be classed as banks of deposit, and so distinguished from our 
modern banks of discount, deposit, and issue ; for, although for 
the accommodation of wholesale and foreign trade, they substi- 
tuted their own notes or certificates, the credit so issued was not 
adapted to retail dealings and ordinary expenses ; that is, they 
were not graded in small denominations or fixed sums, such as 
one, five, twenty, and fifty dollars notes. They were not properly 
circulating notes, but were rather orders, drafts, or transfers of 
deposits, — immensely useful in their way, but not substitutes or 
representatives of the small coins or small notes which daily busi- 
ness demands. 

T. We have followed the history of the banking system in its 
formative stages for the purpose of analyzing its principles. To 
trace its development up to our own time, we must notice the 
characteristic forms it has taken in the English, Scotch, French, 
and American modes of its workiniis. 

BANK OF ENGLAND. 

T. I am as tired of repeating, as you can be of hearing, the 
universal wail of the IGth and 17th centuries over the evils of the 
coin circulation in Europe. Notwithstanding the insular position 
of England, and her then small foreign trade, and employment as 
a common carrier of the nations, it was alleged that the debased 
coin used in purchasing her products for exportation, in the days 
of Elizabeth, robbed the producers of five-sixths of their value. 



BANKING. 195 

This must have been an over-statenoent. But the loss must have 
been indeed very great to keep in countenance such an exaggera- 
tion. It is probable enough that, at its worst, the metallic medium 
was as vexatious and injurious as ever a depreciated paper cur- 
rency has been at any time or place where it was not utterly 
worthless. 

The reasons urged for the establishment of banks, and the plans 
for their conduct, from the time of the protectorate of Cromwell 
to the reign of William and Mary, are in a high degree interesting 
and instructive, too, but I must not undertake a display of them. 
The treatises publisbed on the principles and policy of the banking 
system from that time down to the present day would fill a public 
library. Mr. Colwell had 1800 of them upon the subject of 
money alone in his collection, and he might have collected 1800 
more if he had been curious to show that " of the making of books 
and pamphlets (on that subject) there is no end." 

P. Did Mr. Colwell read all these treatises ? 

T. I put that question to him once. He answered: " Enough 
to know that there is almost nothing in them." They are all now 
in the library of the Pennsylvania University at Philadelphia, 
where they may be consulted. His own work, entitled Way% and 
Means of Payment^ exhausts the subject without exhausting the 
reader. Mr. Carey's treatment of the topic in that part of his 
Social Science which he entitles, " Of the Instrument of Associa- 
tion," throws a cross-light upon the philosophy of money and 
banking which will serve to thoroughly complete the study. 
Together these two authors will repay the closest attention, which 
leaves very little to be desired in that branch of political economy. 

B. You are familiar with the books which you so highly com- 
mend. Were these gentlemen, or were they not, biased by their 
commitments in other departments of econom.ic doctrine in their 
treatment, of this one ? 

T. Read them with whatever caution such an apprehension may 
fairly induce. I have not found the evidence of any damaging 
prepossessions or warping theories in either of them. 

But to the matter immediately in hand. I will not detain you 
from what we shall have to say of the Bank of England by a 
reference to the discontent of the English people under the evils 



106 roiJTICAL ECONOMY. 

of tlieir coina;2;e further than l>y sayinj:; that it pressed Edward 
AT. ('[')47-li')i')-\) upon an cttbrt to devise a remedy, which, how- 
ever, he left unexecuted. His successor, Mary, in her brief rci_!j;n 
of five years, succeeded no better, and it was left to the heroic 
Elizabeth to achieve the best that could be done in her time 

(ir)r)S-iG(m). 

During the latter half of the 16th century the current of thought 
and the ])lans for relief ran in the direction of establisiiing agencies 
for the substitution of credit money as a sim])le rei>resentative of 
the coinage which was foinid to be entirely unfit for the business 
exchanges of the time ; b»it the scheme of deposit banks, so suc- 
cessfully em))loyed on the Continent in the first half of the cen- 
tury, does not seem to have been seriously or hopefully consid- 
ered. The exchange machinery su])i)lied for the larger transactions 
of trade, by the TiOndon goldsmiths, by its facilities of transfer in 
the pro))erty and service of coin, seemed to suffice for the manage- 
ment of metallic money ; and the issue of their negotiable notes, 
receipts, or other evidences of debt for deposits, had become a 
familiar currency, answering well within the limits of their capa- 
bility. The value of this agency remains a tlienie of admiring 
report in our common iiistories. All writers speak of it as a 
mod(d or typical idea of the money policy, anii it is not surprising 
that its atlvantages and successes shoidd have captivated its con- 
temporaries. But it worked as a barrier to imi)rovements which 
were dei)artures from its well-a})proved system. Connmniities 
hardly ever change tiieir favorite customs for untried better ones. 
It is generally severely felt inconveniences that put practical 
]»eo])le upon improvements ; and it did not occur to the projectors 
of Elizabeth's time to merge the depository in, or combine it with, 
a systematic credit system answering all its intentions. 

No public ever was busier than the ])ritish during a whole cen- 
tury previous to the opening of the liank of l<]uglaiul with schemes 
to amend the conunon money medium which they were all using 
and complaining of so grievously. Speculative projects ran as 
wild then as they do now without the grounds of a like complaint. 
The press groaned under treatises giving all sorts of reasons for 
all sorts of schemes ; some of them resting on commodity pledges, 
some upon landed securities, and some few upon no security at 



BANKING. 197 

all. An index, or table of their contents, would do good by show- 
ing inventors that there is nothing new on that subject under the 
moon. 

P. Your friend, Mr. Carey, is reported as saying: "Meet any 
man on the street and ask him to make a hat, or a coat, or a pair 
of boots for you. Every one of a thousand strollers would answer, 
' Sir, I never learned either of those trades.' But if you ask for 
a banking system or state constitution, nine in ten of them will 
accommodate you with a theory as infallible as a panacea, a 
catholicon, or an anti-bilious pill. Even in conventions of world- 
menders one of every ten is equall}'- competent and ready. They 
are just as able to distil tallow out of rain-water as anybody that 
ever went into the speculation." 

T. Yes, in the judgment of iyispired economists, the experts of 
study and experience are the incapables. They scorn the idea of 
working and waiting for the millennium that is to come in the ful- 
ness of time ; they prefer lugging it into realization by the head 
and shoulders. They answer insuperable objections and doubts 
of their competency by declaring that they have a right to think 
for themselves, overlooking the fact that they are assuming the 
right to think and act for other people, who probably prefer to 
have their thinking upon unfamiliar subjects done by people skilled 
in the business. 

D. St. James expressed the opinion that it is the professional 
priests and prophets that bring " damnable heresies" into the cause 
of religion ; and it is certain that the very biggest blunders have 
been made in other matters by men holding the position of coun- 
sellors and guides. So that in the average the common sense of 
common men has the advantage over professionals and doctrinaires. 
T. The multitude has this advantage of projectors, that they have 
the trying and testing of the projects which concern them. Their 
judgments are formed upon experience, which if it does not test the 
truth, certainly does test the expediency of the thing proposed. 
They do not take responsibility for opinions about the unknown 
and untried. The pioneers of thought and action put their predic- 
tions upon record. The common sense judgment gets the oppor- 
tunity of the after-thought. The men of forethought are often 
exposed to the vulture of criticism. Genius blunders oftener by 



198 POLITICAL ECONOMY. 

putting trust in those who must incarnate its conceptions, than by 
the mistakes for which it is rightfully answerable. 

But the Bank of England is waiting upon us for a hearing, as it 
waited a century or so on the wrangles of theory previous to its 
inauguration. Disputation, however unavoidable, hinders business. 

The Bank of England crept into existence not as a formal cor- 
poration chartered by that name, but under the guise of " an Act 
of rarliameut granting their Majesties — William and Mary — 
several duties upon tonnage of ships, and upon beer, ale, etc., 
for securing certain recompenses to such as should subscribe 
^1,200,000 to a fund at 8 per cent." The subscribers thus be- 
came in eifect a bank. Ttiey paid or loaned their whole capital to 
the Government at 8 per cent. ; and the money, instead of being 
stored in its vaults, was scattered throughout the kingdom. The 
cash tpok the form of a National debt, and became a credit fund. 

D. Then the capital was but the shadow of the cash Avhicli it 
represented, daguerrotyped upon the books of the bank. " What 
shadows we are and what shadows we pursue." 

T. Tiie shadow^s that are '•'- types of good things to come " can- 
not disappoint the hope worse than the touch of a JNIidas that turns 
everything to gold. Still it is true that expectation often embraces 
a cloud where it grasped for a goddess. Yet, the credit of the bank 
did not then fail when its entire capital was vested in the National 
debt, and it is not now injuriously affected because fourteen-fif- 
teenths of its present capital is in the National securities. Just 
now about 15 millions of pounds sterling in Government stock and 
securities, with about 25 millions in gold and silver is found, after 
long experience, to be an adei^uate basis for 55 millions of liabili- 
ties. And none of the mischiefs which it inflicts upon the public 
are the fault of its securities ; but, paradoxical as it may seem, the 
worst of its operations are in the measures which it adopts to insure 
its solvency. 

As a pertinent fact in the history of modern banking it is to be 
noted that it was the first joint-stock bank erected in England, and 
that so lately as the year 1694, and that it continued to be the 
only one in London until the year 1881:. At that date it was fol- 
lowed by the London and Westminster, which proceeded success- 



BANKING. 199 

fully and was quickly followed by the London Joint Stock, and the 
Union Bank of London. 

P. How do the resources of the bank usually stand to its lia- 
bilities ? 

T. The proprietors' capital in May, 1877, when the condition 
was regarded as fairly good, was ^£14,553, 000 ; rest, je3,0G3,480 ; 
private deposits, .£22,480,099; circulation, ^29,077,985; coin 
and bullion, £25,004,621 . Adding to the circulating its post notes, 
£837,059, its total liabilities amounted to £58,210,693. Subtract- 
ing its coin and bullion leaves its liabilities at £33,206,072, and 
to cover this liability over its specie on hand its securities amounted 
to ^636, 269,552 ; this over-balance of available resources was its 
rest of ^3,063,480. The bank, therefore, was able to pay on 
demand, without converting any of its available resources outstand- 
ing, 43 per cent, of its liabilities in specie. A less percentage than 
this is regarded as an ample provision of redemption fund for banks 
in good credit in the ordinary condition of the money market. I 
believe that 25 per cent is deemed quite sufficient. In a panic, of 
course, the soundest bank as well as a perfectly solvent merchant, 
whose funds are largely in the hands of its customers, may be 
pressed to a suspension of payment. 

P. A statement which I find among the notes which you have 
submitted for our consideration, exposes extremely variable rates 
of interest or discount charged upon its loans and advances upon 
immature bills and accommodation paper, ranging all the way 
from 2 to 10 per cent. — rates sometimes lower than the lowest 
usual hire of money in England, and sometimes higher than the 
highest possible yield of profit to the borrower. What does this 
mean ? 

T. Such wide and wild changes of the bank rates sometimes 
mean a scare, sometimes an honest necessity, and sometimes, I 
believe, are a trick of the money trade. When the rate is low, it 
is because the funds would otherwise lie idle and profitless ; when 
the demand is light, the interest charged falls ; when it is great and 
urgent, the rate rises, as in the dealings in other commodities. 
Food is a drug in the market when it is over-abundant. In times 
of scarcity it goes up to starvation prices. In business, carried 
on by the largest and soundest dealers, it is done largely upon 



200 POLITICAL ECONOMY. 

credit ; the credit of the dealers employing and discounting the 
credit of their customers. Banks are the usual intermediates by 
which they anticipate payment of their bills receivable. 

But it is not only in expectation of profitable investments that 
money is sought for. When debts mature, money must be had to 
avoid bankruptcy, and in pressing exigencies it will command rates 
of interest that correspond to the scarcity and starvation prices of 
the food-market. The pinch of the necessity may arise from 
either a magnitude of the demand or a deficiency of the supply, 
and a money institution of high credit, has then command of the 
situation. The Bank of England has, beside this natural advan- 
tage, a background support in its charter which requires it, in a 
fixed relation of its resources to its liabilities to either shut down 
upon its customers, or to check their demands for its accommoda- 
tions by raising its rates of interest to a height that drives all but 
the desperately necessitous from its auction sales of credit. How 
this policy, partly real, partly imaginary, and partly speculative, 
is capable of working, I need not stop to explain or expose. Think 
of a corner in wheat or coal, or in any other necessary of life, and 
you have a sample of a money stringency, actually existing or arti- 
ficially and artfully produced or exaggerated. In such a scarcity 
of supply to meet an urgent demand, you have an analogue of 
tight money markets. Think of credit as the food of the great 
commodity exchange, as it is now conducted, and you have its 
fluctuations explained by a sort of object teaching. You may see 
it sufficiently well by its running correspondence to appetite, hun- 
ger, and the conditions of the diet which they require for growth 
and gratification. 

F. What a picture ! The butcher at his stall in the shambles, 
sometimes begging custom, lest his stock shall spoil on his hands ; 
sometimes, when you are hungrily importunate for the nourish- 
ment on which your life depends, making your necessity the meas- 
ure of his exactions. How like the banker, offering, proffering 
Ills wares, on your own terms, when your wants are not pressing 
at 2 per cent., and holding them at five times that price when 
your needs are the sorest! 

B. How I am relieved of a long strain upon my feelings and 
opinions by your finding a hole in the cloak, that by the ampli- 



BANKING. 201 

tude of its theoretic doublings and infoldings cannot quite cover 
the disasters that mark its Avear and tear in actual use. It may 
be allowed that the credit system does " raise the wind," but it 
must also be admitted that it is fairly responsible for the financial 
storms which it brews. Is it because it rises into gusts sometimes 
that your Pennsylvania Dutchmen call payments of debts in instal- 
ments by the figurative name of gales ? 

T. The capability of great service in the iiiventions of men are 
just the things that are liable, under mismanagement, to the great- 
est abuses. You have, doubtless, occasionally suffered severely 
from the law of gravitation, which usually holds you steady on 
the earth, when you have made a misstep in your adjustment to 
its power. 

P. Your explanations already made, may cover and include the 
difficulties that there are in understanding the procedure and the 
policy of banking, but one unfamiliar with the subject requires to 
have the thing turned inside out and exhibited on all sides, to 
assure him that he has the theory. Allow me, for this reason, to 
ask for the indications in bank reports that the fluctuating rates 
of interest are required or justified. 

T. There is a pretty close connection between the amount of 
the reserve held by the Bank of England and the rate of interest 
charged. For instance, when its reserve of notes and coin was, 
in May, 1876, thirteen millions of pounds, the discount was at 2 
per cent.; in May, 1877. the reserve was eleven millions, nearly, 
and the discount rose to 3 per cent. ; in May, 1867, the reserve 
being the same, the discount was also at 3 per cent. ; in May, 
1874, the reserve being down to nine and six-tenth millions, the 
discount was 4 per cent. In 1875 the rate of discount did not 
rise in proportion to the fall of the reserve, which was then one 
and a fifth millions below that in 1874 ; the discount was then lower 
— 3|- per cent. The London Economist gives as a reason that 
the value of money tended to fall at that time was in the absence of 
demand for gold from Germany, and for the further reason, that 
trade was generally quiet. The rate was lowered because there 
was no probability of a run upon the specie in the bank's vaults. 

P. You speak of the "Reserve" as consisting of coin and 
notes. What notes are these ? 
14 



202 POLITICAL ECONOMY. 

T. They are notes lield unused by the "Banking" department 
of the bank. To understand these notes as a reserve coupled 
with coin in statement, and having a like effect upon the resources 
of the bank as set-off against its liabilities, you must understand 
that the institution is a couple of distinct but united offices. The 
charter of 1844 limits the amount of bank notes issuable by the 
" Issue" department to the " Banking" department to the aggre- 
gate value of the gold and silver in possession added to the gov- 
ernment debt to the bank. At the date mentioned these securities 
amounted to ^£39,228,650 (the gold and silver in the issue de- 
partment being =£24,228,650, and the government securities 
^15,000,000). To the exact amount of these securities, the 
banking department receives from the issue department circulat- 
ing notes for its business transactions "svith the public. That 
]iortion of these notes which the banking department does not put 
out constitutes its " reserve " in notes. 

The reserve, mentioned in the periodical reports of the banking 
department, is not the gold and silver account of the issue depart- 
ment — that, with the national securities, stands back as bail or 
security for the liabilities of the banking department, as our 
national bonds, deposited in the Treasury, are simply securities 
for the notes issued from it for circulation by the banks. The 
reports of the hanldng department mean by its reserve the small 
(juantity of gold and silver required for its customary business, 
and the unused notes on hand. This reserve, in the case men- 
tioned, consisted of notes j£'l 0,150,665, and of gold and silver 
j£775,lt71 (observe that these notes are a real reserve, because 
they represent their equivalent of specie in the issue department, 
Avhich, if need be, can be drawn by returning the notes to it). 

The sum of the assets in precious metal is that deposited in the 
issue department, ^£24,228,650, and j£775,971 in the banking 
department; so that the bank had j£25,004,621 in coin against 
j£29,415,044 in notes outstanding, but while the bank thus held 
4| millions less of coin than it had outstanding in notes, it had its 
15 millions of government debt, convertible through the money 
market into coin ; leaving it 10 J millions of surplus on that ac- 
count. But it had at the same time 20 millions of deposits which 
it was liable to pay on demand. For the difference it must rely 



BANKING. 203 

upon its outstanding loans, wliich, if available, would more than 
meet the liability : the credit of its debtors being the security for 
its debts over and above its means in hand. 

D. There is a good deal of complexity in the machinery of the 
bank. I cannot trust my arithmetic to ascertain its solvency in 
any state of its condition, or from such data, imagine its risks. 
And I should like to know whether it has ever been in danger of 
failure . 

T. That it has been more than once in danger of a suspension 
of specie payments within the last 36 years, under its present 
charter, and that it did so suspend in effect, is palpable. 

D. What is the evidence of this charge ? 

T. Sir Robert Peel, by the bank charter of 1844, which he 
passed by his influence through Parliament, limited, as before 
stated, the note circulation of the banking office to the amount of 
the gold and silver in the issue department, added to the national 
securities, also held there. These securities stand at the back, 
but behind the back of the banking office, and are available for its 
debts only after it has failed to meet and discharge them. Be- 
side its debt upon its outstanding notes, it has an immense debt to 
its depositors. Its specie is less than a million, its liabilities on 
demand are equal, all told, to nearly 60 millions. Is there not a 
possibility of a pinch in this condition of things ? The facts of its 
history answer. The managers ii! 1844, cried out in their appre- 
hension of an immediate suspension, to her Majesty's Privy Coun- 
cil, for permission to violate the restriction in its charter. That 
is, for the privilege of issuing notes beyond the value of the 
securities in the issue department. In 1847 the bank appealed 
for the like relief, and obtained it. In both these instances it 
must suspend its operations or go beyond its ability to redeem its 
promises to pay on demand. Again, in 1866 (the third time in 
22 years), to relieve it and its customers from distress, the Privy 
Council extended the same privilege or authority to evade the 
condition imposed by its charter ; bat the mere possibility of the 
release answered the purpose, and it tided over the sliallows with- 
out actually availing itself of the proffered tug-boat assistance. 

A strongly illustrative instance is, in effect, thus given by one 
of the safest authorities upon English finance : — 



204 POLITICAL ECONOilY. 

"A drain of gold set in, in 1857, for money was as much 
needed in France and Germany as in England and America. The 
necessity for sending large sums of silver to the East, to meet the 
demands occasioned by the Persian and Chinese Avars, added to 
the mischief. The bank raised its rate of discount in six weeks 
from 6 to 10 per cent. ; but even so, it was unable to maintain its 
reserve. By the 11th of November the stock of coin and bullion 
had fallen to <£6,675,000, and the reserve of notes to ^£957,710. 
The demands to which the bank was liable were j£'12,935,000 
upon its private deposits, and on the other hand, the bills under 
discount and other private securities amounted to ^£26, 115, 000. 
Under these circumstances the government took the same step as 
had been taken ten years .before. They recommended the bank 
directors to take upon themselves the responsibility of issuing 
notes upon securities beyond the limit prescribed by the bank 
charter act ; and they undertook to call Parliament together, and 
propose a bill of indemnity for this breach of the law. The bank 
did, accordingly, avail itself of the authority of the Privy Coun- • 
cil to the extent of j£2, 000,000. And so it escaped a suspension 
of its business by a virtual suspension of specie payments under 
the restriction of the charter." 

These, however, were exigencies in which the danger Avas im- 
minent and impossible of postponement. The threatening of such 
a catastrophe is not unusual. Vihen it puts up its rate of discount 
or interest anywhere, let me say above 4 or 6 per cent., it is done 
under forecast of a falling sky. In such sf^asons of a strain upon 
its immediately available resources it is driven to defend itself 
against the necessity of calling in its loans, and granting extensions 
or new accommodations to the business community by oppressive 
rates. I need to cite only these instances: — In 1S48 its discount 
rate was at 8 per cent. ; in 1854 at 5 J ; in 185G, and 7 per cent. ; 
,in 1857, 7 to 10 per cent. ; in 1858, (3, 7, 8, 9 and 10 per cent. ; 
in 18l3(), drifting into suspension, G, 7, b, 9, and 10 per cent. In 
1857 it clianged tlie rate eight times ; and in 1858 after it got 
relief, it changed eleven times before it got down from 10 to 3 per 
cent. : in 18(31 it fluttered through fourteen chaniies from 5 to 4 
and thence to 8 per cent. ; in 1834-5-0, 3 years, it gambolled or 



BANKING. * 205 

gambled from 3 to 10 per cent, througli the intermediate forty-six 
stages of ups and downs, averaging fifteen changes a year. 

What think you of reeling through such a dance of death as this, 
and of its disastrous influence u.pon a dependency of the money 
interest equal to 100 millions of our dollars, with all its incidents 
of losses, suspensions, and insolvencies among the business men of 
the great metropolis of the world's trade ? 

P. If such disturbances in the money market, depending upon 
the conduct of the bank, are made necessary by the restriction im- 
posed upon it by its charter, the fault lies there. 

T. For these mischiefs the bank is responsible to the extent of 
its influence in producing them ; for they are not all due to, or 
chargeable upon, the pinching restriction of its charter. 

The bank is a corporation of stockholders, and their interests 
greatly modify its conduct. As they profit largely by the tight- 
ness of the money market, it is allowable to infer that they not 
only welcome high rates of accommodation, but have a share in 
provoking and continuing them beyond the necessity imposed by 
their charter obligations. 

D. If the bank raises its rates as a defense of its resources, 
does it not diminish its profits by diminishing its business? 

T. It must reduce its loans and discounts to one-fourth of the 
ordinary amount before it can lose anything at 10 per cent, from 
its profits at 2|- per cent., which, by the way, is about or quite the 
average increase of investments and general yield of money in 
England, and is,,therefore, the normal rate of interest. In fact, 
I find that when its charge was 2 J per cent., it paid its stockholders 
7 1 per cent, dividend upon the par price of its stock. When it 
paid them 9 per cent.,' its charge was 3 J per cent. In 1866 when 
the business revulsion was the sorest, it charged in the 16 changes 
of rates of that year, all the Avay up from 4| to 10 per cent, dis- 
count, and divided a profit to its stockholders of 11 per cent. So 
you see the bank gains by the public suffering, as doctors do in 
epidemics, who are not likely to pray for the general health, but 
more likely to prey upon its disorders. It is not all a cautionary 
decrease in the accommodation of the public imposed by its condi- 
tion, for in 1860 when it was lending and discounting at 3| per 
cent, its loans and discounts were 30^ millions of pounds ; but in 



20G • rOLITICAL ECONOMY. 

1866 when it M-as charging 6, 7, 8, 9, and 10, it tightened the 
screw 6 millions in one of the quarters of that year, and 7 millions 
in another ([uarter of the same year, and raised its rates from 6 
and 7 to 9 and 10 per cent. 

I). If such unsteadiness of a thing which ought to have the steadi- 
ness of a standard, but, instead, keeps prices and prospects damag- 
ing in stimulation and depression alike, are traceable to bank 
manipulations, has not the evil induced endeavors at a remedy ? 

T. It has provoked complaint enough, but the remedy has not 
been found. John Bull is an obstinate creature, and like Issachar — 
" is a strong ass, he boAvs his shoulders to bear, and becomes a 
servant unto tribute " (Genesis xlix. 14). When he once gets it 
into his head that an institution is of the true-born English sort, 
he will bear it with wondrous endurance and with a patience that 
is almost amiable, rather than resort to a "blasted" novelty. He 
believes now that Peel's contrivance for making the Bank of Eng- 
land-note convertible on demand into hard cash, even at the risk 
of every other service w^hich it ought to render, is the very per- 
fection of financial skill. — The result of the largest experience of 
the ages gone by, and the wisest policy of her savans of finance, 
and notwithstanding that the restriction-trap in the bank's charter 
has to be let up every time for which it was provided to act, and 
set again for just as long as it is useless, it stands there upon its 
accommodation springs, as the regulator and insvirer of a sound con- 
vertible currency — when nobody wants the currency converted — a 
safety valve that must not play when its designed use is required. 

P. Is the restriction clause of the charter so ridiculous as that ? 
Is the science of currency in no better condition than that in the 
metropolis of the world's commerce : and is it so absolutely absurd ? 

T. It would be ridiculous if it were not more mischievous than 
preposterous. 

D. There must be some indications by persons of authority 
suffering these errors in the bank's constitution, that support your 
sweeping condemnation. 

T. A royal commission was moved in Parliament, in 1866, " to 
investigate the causes which lead to the long continuance of a 
minimum rate of discount of 10 per cent., in which the large 
profits of the Bank of England were alluded to as supplying one 



BANKING. 207 

" reason why an inquiry should be made." A member of the 
House of Commons and a director of the bank conceded the 
charge against the bank, with all its necessary implications con- 
tained in the resolution, by begging the House to remember that, 
"Avhile borrowers suffered, the lenders gained; and that, as both 
are citizens of this country, the gain, as well as the loss, would be 
felt throughout the empire." Is not that a tid-bit of logic worthy 
of a broker, who could on the same ground justify a speculation in 
the weakness and folly of a profligate heir expectant who sells his 
post-obits at 50 or 60 per cent, discount ? 

D. What came of the investigation ? 

T. I do not know, and nobody need care. The charge in all 
its force was conceded by an official of the bank, just because it 
needed no other proof or explanation than the published reports 
of the bank. The Money Market Revieiv went into a statistical 
confirmation, which I have used as to the particulars of the affair. 
The text-books and encyclopedias of British authors are chary of 
its abuses in their notices of the great regulator of their currency ; 
but they admit what, indeed, cannot be denied or explained away, 
that the bank has been frequently on the verge of suspension, but 
they do not generally or frankly expose the fact that it as often 
saves itself in its embarrassments by crushing its dependencies. 
Sir Robert Peel and his advisers intended to restrain the master 
bank of the kingdom, and, through it, all the other banks, from 
making over-issues of circulating notes, and insuring their instant 
convertibility, but his restriction trap never did prevent inflation ; 
and, when the crisis came upon the great regulator, it only threw 
the penalty and the damage upon the public. We have seen that 
the corporation makes itself not only exempt from the revulsions 
which it helps to produce, but profits largely by its interference 
to relieve the mischief when it comes, or only threatens to come. 

D. If such evils are inherent and unavoidable in the bankinsr 
system, is there no help for it ; no more promising corrective than 
the experience and the wisdom of the money metropolis of the 
world has devised and adopted ? 

T. We shall probably see, as we proceed with our studies. 
And, let me here remark, that the phrase, " money metropolis of 
the Avorld," meaning a power held, and a reputation acquired by 



208 POLITICAL ECONOMY. 

its centralization and domination, calls for a revolution throughout 
the domain of finance. A declaration of independence is wanted 
to throw oft' the yoke of its despotism, and a setting up of local 
governments to escape colonial enslavement. 

P. I see, by the reports, that there are in the United Kingdom 
other institutions, with an aggregate of capital and deposits more 
than equal, and a circulation nearly efjual. to those of the Bank 
of England. Do they not materially modify, or, to any extent, 
check or counteract its irregular workings ? 

AMERICAN BANK EXPERIENCES. 

T. Scotland has a greatly better, as well as a widely different, 
system. That of France advantageously compares or contrasts 
Avith that of England and Wales. And our present national bank 
policy affords a critical and instructive analysis of its policy. But 
w^e must defer these inciting investigations until they fall more 
appropriately into the plan of these inquiries. 

P. It seems to me that the varied banking experience of our 
own country, modified and guided by that of the Old World, must 
open up the whole subject to the light. We have discussed every- 
thing, and tried everything that belongs to the subject ; and, not 
being old enough, conservative enough, or even orthodox enough, 
to be bigoted in our views of anything in doctrine or in practice, 
we should by this time be able to bring the machine, its springs, 
and issues into view ; or, in failure of a complete and profitable 
exploration, we must have exposed our incompetency, which suits 
these conversations just as well. Let us try this self-examination, 
and, if possible, avoid the self-glorification that too often attends 
the business of heart-searching. 

T. There is much in our own history that will be pertinent in 
our present train of thought. Let us see some of these points. 

Ever before the late Southern rebellion, under some differences 
of forms and modifications in detail, we were guided in our bank 
theories by the doctrines and practices of the countries which Ave 
were accustomed to call our mother or our fatherland. Afl[iliation 
in this, as in other things, clung to our robustuous political sever- 
ance from our kindred over the water. We tried in many ways 



BANKING. 209 

to provide a currency, a credit currency, in the form of circulating 
notes, and tried as earnestly to secure their redeemability. We 
tried, once or twice, to give the currency a uniform value by meas- 
ures promising to be effectual, but generally less, even less, suc- 
cessfully, than were our foreign exemplars, although the bank 
troubles of England, in some exigencies, might keep our own in 
countenance, for there were about an even proportion of fraud and 
folly in both cases. 

P. Is it possible that the city and country banks of England 
and Wales ever went into such confusion as ours have done ? 

T. A bald statement of the facts of nearly corresponding dates 
will show. Mr. Gallatin, Secretary of the Treasury, reported to 
Congress that, between 1st January, 1811, and 1st January, 1830, 
165 of our banks failed. British history caps this report with 240 
failures between 1814 and 1816 ; and, from 1824 to 1830, 118,— 
an aggregate in sixteen years of 358 against our 165. In 1841 
fifty-five American banks broke ; between 1839 and 1848 eighty- 
two British banks succumbed, of which forty -six paid nothing to 
their creditors, and the average dividend of the remaining thirty- 
six was less than 35 per cent. It would be curious to know the 
relative amounts of losses following these failures, but it is ap- 
parent that the respective results under a generally similar system 
exhibit the common vice of both. 

Twenty or thirty of our local legislatures, without any bond of 
union or concert of aims, gave us our Avild-cat,. red-dog, and other 
irresponsible paper-money factories. England's one Parliament 
allowed the catastrophes that followed its administration of the 
great trust. The fault of each looks monstrous till its fellow's 
fault is brought to match it. 

D. Fair play, in this comparison of systems, requires you to 
note the fact that our great national, the United States Bank, 
which was claimed to be the regulator of the American banking 
system and its safeguard, suspended, resumed, and finally broke 
irretrievably between 1837 and 1841. The Bank of England never 
went so far as that. 

T. Stop a little. In 1796, when the debts of the Bank of Eng- 
land stood at j6l5,903,110, and its stock of coin and bullion very 
little exceeded one million, an order of Council was issued author- 



210 POLITICAL ECONOMY. 

. M 

izing its suspension, and /o?7>u?'7iu/7 it to pay its debts; that is, 
to pay coin on its outstanding obligations, on the public ground 
that such coin would be exported to foreign countries, but really 
because it had not the cash on hand to meet its engagements. 
This failure, or postponement of payment, would have been bank- 
ruptcy in an individual, but it Avas not insolvency, only suspension 
in bank dialect, Avhich suspension lasted twenty-five years — till 
1821. In 1837 its condition, with all the support of the national 
exchequer, which was then largely in its debt, was so unmanage- 
able that the judges of its chances admit that it was saved from 
actual bankruptcy, not insolvency, by the aid extended to it by 
the Bank of France. And what can be said for its banking solv- 
ency in 1847, 1857, and 1866, when the Privy's Council's inter- 
vention saved it from going into liquidation ? 

But, when the " Bank of the United States " fell into trouble, 
in 1837, its charter by Congress was taken from it; the public 
deposits were removed ; the President (Jackson) had declared it 
insolvent and corruptly administered. It had nothing then but its 
cash and a badly damaged reputation to sustain it. It suspended, 
or postponed payment, but finally redeemed all of its circulation, 
paid all its depositors, leaving only its stockholders to suffer, and 
had a trivial surplus of about two dollars per share to divide to 
them. I think, all things considered, the Bank of England does 
not contrast so strongly as you present it. Might not our Regu- 
lator have survived under the fostering care of the Government, 
such as the Bank of England enjoyed, if it had been so helped by 
every contrivance that the Ministry could invent ? Among other 
things its paper made a legal tender ; its suspension legalized, 
with a provision that the bank could not be sued for non-payment 
of its notes ; and that no person could be held to special bail in 
any action against which he had tendered in payment Bank of 
England notes. 

Under favor of such immunities as these the Bank of England 
was able to make dividends of 7 per cent, from 1793 to 1806, and 
10 per cent, per annum from that date till 1816. Its total divi- 
dends in these twenty-four years brought to the stockholders of 
this suspended bank the handsome sum of <£23,051,952, and 



BANKING. 211 

bonuses beside of ^66,694,380,— equal together to $152,269,711, 
or 250 per cent, on the par of their capital ! 

D. In view of such results, how happens it that they never 
brought irretrievable ruin upon the business world? You will 
allow me to judge the facts of history by their issue. 

T. There is a vital force in the springs of the business organism 
that survives the disasters of its mismanagement. You have seen 
healthy and able-bodied people, who had passed through the con- 
vulsions of teething, the eruption of measles, the struggles of 
whooping-cough, who had been roasting themselves over the 
kitchen fire, in June, and soothing themselves with ice-water in 
January, and all the while subjected to the curative quackery of 
drug remedies, yet had survived all these disturbances of a broken 
balance in their vital functions, and, despite of them, had grown 
into strength and average stature. Would you question the 
reality of their diseases because their bodies had not broken or 
gone into liquidation ? Rather you would conclude that human 
nature is tough. 

P. I confess that all along the revelation of the evils of the 
banking system, so long in vogue, I have hesitated to accept a 
systematic pathology of the patient's disease, which looked so like 
a coroner's inquest upon the dead body of its subject, with a ver- 
dict of suicide committed in a chronic attack of mental alienation. 
But it seems that the common life of communities will, however 
broken, brokenly live on ; and that the Promethean fire will burn 
on though the vulture revenges of transgression are ever tearing 
at the vitals of the body corporate. 

T. At their best, the country State banks of our system were 
under par in their, own metropolitan cities, and our city banks 
were at a discount in their neighboring cities, which altogether 
amounted to a heavier tax upon the people than even their fre- 
quent bankruptcies. A few miles from home their notes were 
aliens, and were discounted in trade in proportion to their dis- 
tance. They were under no common control, and carried no 
vouchers of their solvency with them. Their notorious uncer- 
tainty of redemption had the effect of generating a hard-money 
theory of currency that was always lying in wait to destroy them. 
Their reported value ran up and down at the will of speculators. 



212 POLITICAL ECONOMY. 

half a dozen times a day in the auction shops, well named money 
markets. Their instability of exchange value put up prices at the 
expense of creditors and consumers, and then again, put them 
down to the damage of producers and debtors. The total wrecks 
of fortune which they in great part occasioned, were estimated by 
Mr. Gallatin at 75 out of every 100 merchants in the country. 
The dealers in disaster sometimes piled up fortunes, which is a 
bad distribution of losses and profits ; unless we take for sound 
the consolatory doctrine of the British bank director, already 
quoted, that it was as we say, "all in the family," or as he said, 
the losers and gainers are all citizens' of a common t;ountry, and 
find compensation in that sort of communal interest where the 
devil takes the hindmost in the race for riches. 

OUR NATIONAL BANKING SYSTEM. 

P. As we cannot get out of the credit currency system vvithout 
going back to the barter of the barbarous ages — which is quite 
impossible — there must be in possibility some available remedy, 
for whatever is necessary, in the philosophical meaning of the 
word. 

T. So far as a sound note currency is a necessary part of the 
credit system of exchange, Mr. Secretary Chase put the essentials 
into this form: — 

1st. A circulation of notes bearing a common impression and 
authenticated by a common authority. 

2d. The redemption of tUe notes by the association to which 
they may be delivered for issue. 

3d. The security of their redemption by the pledge of govern- 
ment stocks, and an adequate possession of specie. 

Or, as he says, " In other words, a plan for the preparation and 
delivery to institutions and associations of note^ prepared for 
circulation under national direction, and secured as to prompt 
convertibility into coin, by the pledge of national bonds, and by 
other needful regulations." 

The existing national banks are organized and acting in exact 
conformity with these re(i[uirements. 

D. It strikes me that resting the security of the circulating 



BANKING. 213 

notes of the national banks upon national stocks, is very like the 
pledge of the national debt held by the issue department of the 
Bank of England for the ultimate redemption of the notes put into 
circulation by the banking department — the Treasury acting as 
the issue department, and the aggregate of the national banks 
acting as the banking department of the Bank of England does. 

T. The American system rests the total of the security for the 
authorized note? in national bonds and redeems them at the Treas- 
ury upon failure by the banks that circulate them. Another dif- 
ference, the act of Congress puts no limit, fixed and inflexible, 
upon the amount issuable. Its provisions in this respect are not 
such a Procrustean bed as that upon which the British system 
stretches and mutilates the victims bound upon it. On the con- 
trary, the pledge of security is exactly coextensive with the 
liability in whatever changes it may undergo. Never more, 
never less than fully adequate. The constituting act provides 
that whenever more currency is demanded for service it may be 
afforded ; whenever in excess in the locality of any bank, it may 
return unused notes and withdraw the bonds pledged for their 
redemption. And whenever a bank suspends payment of its notes, 
the redemption is shifted from its counter to that of the Treasury, 
and an equivalent amount of its deposited bonds are cancelled. 
Thus not a fraction of discount is suffered by the holder, because 
the notes then become a promise to pay by the Treasury, and the 
insolvency of the bank is of no practical import. 

P. The effect upon the currency so authorized and secured by 
the provisions of the act is: — 

T. The establishment of one form of a sound uniform circulation 
throughout the country, resting upon the National credit combined 
with private capital, subject to no discount whatever, and no de- 
pendency upon the solvency of the issuing bank ; effecting a 
transition from a currency under the old or European system, 
which was heterogeneous, unequal, and unsafe, to one uniform, 
equal, and safe ; and providing an effectual safeguard, if an effect- 
ual safeguard is possible against depreciation, and affording com- 
plete protection against losses and cost of exchanges. 

D. So far so good. What does the plan do for the protection 
of depositors ? an interest quite equal to that of the note-holders. 



214 POLITICAL ECONOMY. 

The British bank plan of its great iiis,titution has an equal cai'e for 
deposits and circulation. 

T. There lurks the mischief of that policy. Our banking law 
is not at all indifferent to the interests of the depositors and con- 
tract creditors, other than the note-holders ; but the bargains of 
depositors are with the corporations, not with the Government ; 
and, accordingly, while the Treasury gives due supervision to the 
extent of its responsibility for the advantage of all creditors, it does 
not make itself a surety in the contracts to which it is in no respect 
a party. And, warned by experience, it takes care that depositors 
shall do no mischief to the note-holders. The Government has 
nothing to do with the money trade of the corporations, but so far 
as it gives them public credit or invites public confidence, it 
watches over the conduct of the banks. Observe that a National 
bank is not an office of the United States Treasury. A charter 
of the Government does not make it a partner with the stock- 
holders. It is the currency issued to the company and employed 
by it for which the Government is responsible ; just as it has noth- 
ing to do with the business of a merchant who employs the coin 
issued from the mint. 

To exercise this, its sole duty in the matter of the circulating 
notes required in the common business of the community, and to 
recover its proper control over the currency, Congress, in 1864, 
drove all the notes of the State banks and all other forms of paper 
circulation out of use by imposing a tax upon them which they 
could not support and live. The grand result is, that since that 
date we have a safe, uniform medium, subject to no disturbance or 
inconvenience, except those which may fall upon the Government 
credit. If the National Treasury suspends specie payment the 
banks must ; when the Treasury resumes the banks do likewise ; 
or the Treasury, as the security for their notes, does it in their 
stead. Thus, for the first time in our history, Congress assumed 
and exercised the poAver given to it to regulate the money of the 
country and to fix the value thereof in all its kinds. 

P. You believe that the experience of a 16 years' trial has ful- 
filled all that the National banking system promised. 

T. All, and so far as at present advised, all that any banking 
system can accomplish. 



BANKING. 215 

D. But the Government charters these banks, and thus gives 
the public at least a constructive guaranty of their trustworthiness. 
Is it exactly fair to do nothing for creditors other than the note- 
holders ? 

T. It seems almost impossible for theories, however faulty in 
practice, to get rid of all traces of error. Something of this is 
found in the provision of the bank act which holds the stockholders 
liable to an amount equal and additional to the amount which they 
subscribed and intended to invest in the capital. The act takes 
this much care of the interests of the depositors and other general 
creditors, and by the right and duty of supervision by the Comp- 
troller, guards as well as it possibly can, without otherwise guar- 
anteeing their general business trusts. The Comptroller, by his 
appointees visits and inspects the affairs of the banks, at his 
pleasure, and checks their irregularities. For any grave or dan- 
gerous violation of their obligations he appoints receivers, winds 
up their business, and distributes their assets among the claimants. 
In all respects the Comptroller intervenes in behoof of all the 
bank's customers as far and as beneficially as can be required. 

D. The doubling of the liability of the shareholders upon the 
amount of their investments in the capital stock as provided for in 
the act, does not meet your approbation. Why not an unlimited 
liability of those who through their own officers and agents control 
the bank's business ? It is a sound maxim of law that what one 
does by another he does by himself. 

T. In the case of bank corporators there is a countervailing 
equity to be considered and allowed. Large numbers of them 
are really incapable of controlling the business of the association. 
Heirs and devisees are generally in this predicament ; indeed, a 
majority of the constituents are not morally liable for the abuses 
of a majority of the directors. Besides, the equity of the cred- 
itor is clearly limited by the amount of the investment of the 
shareholder, and the stockholder ought not to be required to risk 
more than he has staked. But without this, the impolicy of an 
unlimited liability is fatal to it : it deters honest and prudent peo- 
ple from running such risks, and leaves the business to such as 
will venture anything in a lottery of chances, intending to make 
the most of it. The recent explosion of the Bank of Glasgow, 



216 POLITICAL ECONOMY. 

(Scotland), which failed through the fraudulent mismanagement of 
its officers, is an apt illustration : A widow lady was saved from the 
loss of all her property hy the roguery of her agent, who, instead 
of purchasing for her some of its shares, ran away with the pur- 
chase-money entrusted to him, and so she escaped a ruinous lialnl- 
ity for all the defalcations of the bank. 

I am not describing the stockholders of the national banks, nor 
of any others. They are as honest as other people, and are bet- 
ter watched. Their risks are mitigated by the ascertained amount, 
and the smallness of the penalty imposed upon their misfortunes. 
I am trying the principle in issue. Out of such considerations as 
these, the comparatively recent introduction ol" the truer princi- 
ple of " limited liability " into the joint stock corporations of 
Europe and America has been largely adopted. Everybody deal- 
ing Avith them has notice, and the bargain he makes and the trust 
he reposes, is a matter of contract, governing both parties con- 
cerned, and is equally just to both. 

P. The "liabilities" in bank reports embrace both the circula- 
tion and the deposits. In what do these two classes of debts differ 
from each other ? 

T. They are alike debts payable by the banks on demand, and 
in that circumstance lies the danger of the proportioned amounts. 
For example: the outstanding circulation of the national banks in 
January," 1880, was over 322 millions, at the same time the de- 
posits amounted to 766^ millions ; something more than 2\ times 
greater. Of course these proportions do not hold uniformly. 
Under the old State banking system the deposits were sometimes 
considerably greater, but always nearly the half of their liabili- 
ties-. Their magnitude is a more or less important element in 
their possibilities of mischief to the note holders. 

P. Do not the "deposits" in bank statements represent the 
money of customers actually left with them, and thus become 
resources as well as liabilities — liabilities because they are to be 
repaid to the depositors, and at the same time resources for that 
use . 

T. They are debts, and for the most part are nothing but debts 
of the borrowers converted into credits. The resources to that 
extent provided to meet them on demand must be looked for alone 



BANKING. 217 

in what is called the reserves. This point will appear by refer- 
ence to the condition of the banks in the city of New York on 1st 
October, 1878. Their deposits are given at 21-3 millions. What 
would this sum in money be doing in the bank, and how would it 
get there ? The loans and discounts were then 196 millions. 
Obviously, the loans and discounts embraced the greater part of 
these " deposits." These loans run, probably, thirty, sixty, and 
ninety days, and were not certainly available to meet the deposits 
on demand. Is it not plain that a panic may become a pressure by 
a run of the depositors ? The very people whose claims upon the 
banks are only their own debts in the form of credits on the books 
of the bank, could cause their suspension of prompt payment. 

I). When the sky falls we may catch larks! 

T. The financial sky often lowers and sometimes does fall. I 
am speaking of the possibilities — the lurking dangers in the bank 
deposits. A squally money market puts the banks upon the ne- 
cessity of providing for possible and threatening demands by 
curtailing their accommodations and calling in the maturing loans 
to their customers. They loaned their credit in the confidence 
that it would be available quite as fully as their liabilities 
would be likely to require ; but, when a pressure is actual or only 
imminent, they are nonplussed. The "depositors," who are for 
the most part borrowers, are also disappointed in their expecta- 
tions ; they must withdraw their deposits. The banks, in turn, 
must press their debtors for payment, refuse extensions of their 
loans and accomodations to the fresh applicants for relief, and when 
the panic runs into an actual pressure, they must suspend, hoAvever 
solvent they may be. In point of fact, the circulating notes of 
the banks are never at the bottom of the alarms which disturb 
them. The note holders know little or nothing of the condition 
of things. Those who are in the position to know it best, never 
have more of these notes than answer for pocket money — they 
make and receive payment by checks. The depositors are in in- 
timate business relations with the banks, and are always in the 
front rank when a run is made. The rear-guard it is that makes 
the rout but do not institute the assault. 

It helps to understand the force of a panic, that while some in- 
stitutions cut up badly, paying all the way from 50 cents on the 
16 



218 POLITICAL ECONOMY. 

dollar down to nearly nothing ; others, that have been forced to 
suspend, that is, to postpone payment, actually discharge their 
entire indebtedness, dollar for dollar. 

Z). Such results as these lie in wait, as necessary incidents of 
the credit system. 

T. It has worse tendencies, and a worse suite of attendants 
than those Avhich we have noticed. Credit-money in the form of 
circulating notes and extravagant bank loans piled up, till the 
structure gets too broad at the top for the basis to support, topples 
over with a crash, and the whole community suffers. Our old 
State bank system is marked by its catastrophes so familiar to ex- 
perience that men began to look for them as they did for the 
invasions of the seventeen-year locusts. Opinion had got into 
such a habit of anticipating business revulsions, and bank suspen- 
sions, and bankruptcies every year after the close of the Southern 
rebellion, and through all the eight years to which the revulsion 
was postponed, but came at last in 1873, from other causes than 
mismanagement of the currency, which was not concerned in it, or 
in any way guilty of it. 

The most of the evil of a bad banking system is in the unregu- 
lated expansion of its credits, by w^hich prices, both orderly and 
speculative, are raised and then depressed, so that creditor and 
debtor, producer and consumer, are losers, and the sheriff takes 
the hindmost. Business for a while is at a stand-still ; labor is 
unemployed. A safety switch has been left open ; the train has 
left the track ; the coroner's verdict finds the accident inevitable ; 
and trips on time are resumed, under an increase of speed, till the 
next disaster checks the train with a shock to all the passengers 
who have not jumped while the engine was taking in combus- 
tibles for the next inevitable explosion ! 

P. Banks have often been found contributing to extravagance 
of expenditure and to unsound valuations of property. They have 
made credit in its various forms over-abundant, and its promise of 
continuance temptingly liberal, so that speculators, and even the 
more prudent of the community, under the excitement of flush 
times, are caught, with the natural result that all alike are crushed 
by the failure of their reliances. The banks and money-dealers, 
holding the outlook from their observatory, anticipate the occulta- 



BANKING. 219 

tions and eclipses among the sky-flyers, and are ready to catch 
the larks when the airy firmament falls upon them; 

T. We must not throw the whole blame of drunkenness upon 
the grog-sellers, nor too severely censure them for kicking the 
bloats, they have helped to make, into the street. The appetite of 
the customers for the stimulus is concerned as well as the thirst 
for gain of the vendors, though this may have something more of 
cool calculation in it. 

Credit, and a representative circulating medium, are indis- 
pensable and inevitable. It has dangers, as liberty has. There 
is security against its risks in bondage ; and the more absolute, 
the nearer it approaches to social death, — the safer it is from the 
ills of life. 

D. The money medium being the instrument of commerce, ought 
to be equal in quantity to its intended use ; and that part of it 
which has no other than a representative value ought to be re- 
strained in quantity to the basis which it personates, or to what a 
grammarian would call its antecedent, for it is by analogy a pro- 
noun used instead of a substantive, to avoid the too frequent use 
of the same thing. Like the pronoun it may be used any number 
of times with all the eftect of its antecedent ; but, just as it would 
be bad grammar to make a plural pronoun represent a singular 
substantive noun, it must be bad finance to make representative 
money excel in quantity the basis which it professes to rest upon. 

T. By the use of that odd analogy, as if it were an even one, 
to illustrate an assumed evenness in the things compared, you help 
yourself with a familiar pattern thought ; but how do you parse 
the proposition, I mean how do you find the concord and govern- 
ment of the parallel ? 

I). I square the simile, or put the parable on all-fours by re- 
quiring the representative to march step by step with the measure 
of that which it represents. 

T. You mean in your form of expression to say just what Adam 
Smith says — I quote him : — " The total volume of credit-money 
which can circulate without injury in a country, can never exceed 
the value of the gold and silver money of which it takes the place, 
and which, if commerce remain the same, would circulate there 
if there was no paper money in circulation." 



220 POLITICAL ECONOMY. 

I). There Smith stands upon ground that cannot be shaken, 
for an image cannot be true Avhich is not an exact copy of its 
original. 

T. To sustain Smith you assume that paper money is only a 
representative of what I suppose you would call the real, or the 
coins of the precious metals. But credit-money is not only a 
representative of such real money, it is also a substitute for non- 
existent cash, and as such may have any proportions that are 
compatible with that part of its proper functions. Paper money 
is not limited to representatives of the precious metals, for it 
represents all the values which it is used to exchange, and to the 
whole extent of those exchanges ; and as the mass of exchanges 
vastly exceeds the gold and silver money in any country, credit 
money is and must be used in commerce. The difference, calling 
for it as a substitute for coin, is as thousands to hundreds. 

Let me add that Smith's doctrine is just the part of his teach- 
ings in which he is most in error ; and that this is admitted by his 
most earnest admirers. Yet, curiously enough, it is just in this one 
of his theories that he is most followed by the doctrinaires of 
finance. 

D. The policy that has all along prevailed for the correction 
and restraint of the bank-note circulation, has endeavored by limit- 
ing the issue to the resources of real money held for its redemption, 
to hold it sound and up to its promises. The judgment of experts 
in this is in perfect accordance with the common-sense or popular 
view of the subject. 

T. With the results we have seen — especially in the history 
and conduct of the systematically regulated great English Regu- 
lator. The dominant aim of its latest charter was to restrain its 
issues to the amount of its solid securities, at the risk and even at 
the sacrifice of every other service it could render to the public. 
Its governing idea is, a sound paper currency, maintained by its 
instant convertibility into coin. But we have seen that this trap 
so carefully set and never in active service until it is sprung, is 
never sprung in the exigencies tliat call it into service. 

Tlie doctrine of Smith so far ])revailcd over all teachings of 
experience, that even in the act establishing our National banking 
system the amount of notes allowed to be issued was at first arbi- 



BANKING. 221 

trarily fixed at 300 millions of dollars, although the same act pro- 
vided for adequate security, an ample deposit of United States 
bonds. Subsequently the uselessness and inconsistency of such 
arbitrary limitation was felt, and the traditionary absurdity was 
escaped and removed by a supplementary Act of Congress (Janu- 
ary 14, 1875), for the reason that it is not a law of the subject, 
but a contrivance of theorists of the money system, reflected from 
an erroneous judgment of the populace. 

D. Even over-abundant caution is warranted in the management 
of a matter of such delicacy and of so great public interest. 

T. But there is no use in pushing the gun after the bullet it has 
discharged, to help it to its aim, if that is what you mean by the 
maxim pro cautela majore. 

P. Is the issue of National bank notes unlimited now ? 

T. It is not limited to any arbitrary maximum amount, but it is 
limited by the value of the securities deposited in the Treasury 
for its redemption. To insure conformity of the supply to the 
demands of business the banks can, at any time, increase their 
quantity of notes by increasing their deposits of bonds, or they 
can diminish any casual excess by returning the notes which they 
hold inactive, and lifting the bonds pledged for them. So the 
system in operation is relieved from guessing how much of them 
may be required for public accommodation. In this respect the 
Bank of England charter compares Avith our circulation policy as 
the lock-jaw compares with a corporation having its sinews free 
alike in action and in repose. Our Congress, after much unavail- 
ing effort to manage the apportioned distribution of the currency 
geographically under the restriction of the original act (February 
25, 1863), in despair of success revoked the limitation and left 
the supply and the distribution to arrange themselves in freedom. 

BANK OF FRANCE. 

P. It is understood that the Bank of France has, with permis- 
sion of the Government, issued its notes without regard to any 
fixed limit, and, in fact, against all precedent, observing no ratio 
to its resources for their redemption ; and yet has maintained 
them without depreciation through the whole period of the Franco- 
Prussian war, the war with the Commune, the strain of the German 



222 POLITICAL ECONOMY. 

indemnity, and of the home expenditure ; and, through all, and 
over all, has escaped the dangers of a wide and wild departure 
from the accepted theory of the banking economy. 

T. M. Bonnet, whose history of the finances of France, in the 
time of i^s terrible trials, manifests his competency as a reporter 
and critic, concludes his examination with — " The financial phe- 
nomena of French experience apparently reverses the economical 
and financial principles which the best authorities on the subject 
have hitherto labored to establish ;" and he cries out in surprise, 
but under conviction which the accomplished facts force upon him : 
"What has happened to produce so great a change in the course 
of things ? Is financial science assuming a new aspect, and prov- 
ing that we have been all wrong in fearing irredeemable paper ? 
Are we to learn that ideas have made progress, and that we are 
on the eve of realizing that famous 'wagon-way' through the 
air spoken of by Adam Smith — a circulation without a metallic 
base ?" 

Now, if I were allowed to answer, I should be bold enough to 
say, things will come about, though Hume, Locke, Smith, Say, 
Ricardo, Mill, and the rest of them, make no arrangement for the 
departures of Providence from the principles and procedure of 
Political Economy. 

The author. Bonnet, is explicit in saying, against his prepos- 
sessions, " No one, unless an advocate of irredeemable paper cur- 
rency (pure fiat money), would have ventured to maintain that 
we could issue bank notes in large quantities Avithout depreciation 
to meet the exigencies of a public debt, not itself redeemable until 
after a considerable time. This, nevertheless, has happened." 
His surprise at this issue of the experiment might fall less heavily 
upon those who, very far from being advocates of fiat money, 
should ask, "Are we forbidden, by any sound principle, to dis- 
count the future on the ground that all labor and all enterprise are 
based upon expectation ?" We sow that we may reap. Railroads, 
factories, all permanent improvements and investments, discount 
the future. 

D. The example of France will hardly aftect the banking sys- 
tem, so long existing and still prevailing everywhere else, I be- 
lieve. It will be hard to tear up its deep-seated foundation, and 



BANKING. 223 

set it ballooning in the air. It will feel safest upon the terra firma 
of an adequate reserve in ordinary times, and take the storms when 
they arise ; or, if I may shift the figure to a less stable element, 
shorten sail until the tempest abates. 

T. That old system, which depends so much upon its anchors, 
requires very fair weather for safe sailing. In 1866 the failure 
of one large house, that of Overend, Gurney & Co., sufficed to 
bring the whole banking system of England into danger. The 
panic was so great that the day of the explosion is called "Black 
Friday." Discount at the great bank went up to 10 per cent. ; 
there were no cheques in circulation ; business involving confidence 
came to a halt ; the Privy Council authorized the Bank of Eng- 
land to suspend specie payment ; that is, to issue notes for general 
relief in any required excess beyond the reserve required by the 
charter. The orthodox basis of the bank note was abandoned, as 
it always must be in the conditions in which any use of it is re- 
quired ; and, wonderful to tell, England exactly followed the ex- 
ample of France, and thereby extricated herself from the toils of 
her time-honored policy of security. 

But, flash the light of a lamp upon a benighted traveller, he 
first shuts his eyes upon the intolerable glare, then opens them 
with a snap, and so gets out of the woods ; but, missing the old 
land-marks of the highway, he gropes about in his blindness till 
he finds again the beaten track, and travels it as before, by the 
guidance of his memory. England is still walking in her own 
shadow, with " the light of other days around her." 

D. Precedents seem to pass for little or nothing with you. 

T. Precedents ! I value them as much as Bacon valued observa- 
tion and experiment in discovery, but not on account of their age. 
Our forefathers are entitled to no more honor from us than we 
may expect from our successors. The best tribute we can pay to 
the past is to keep moving. There is no reason why we should 
not improve our inheritance. 

P. I should like to hear as much of that French test of the old- 
time theory of banking as may avail for the better understanding 
of the question at issue. I should like to know exactly why the 
story is not of " the trials," rather than as it is constantly called 
" the example of France." 



224 POLITICAL ECONOMY. 

T. A very brief presentment of the instructive points of this 
strange eventful history is all that I can promise : 

On the 20th of July, 1870, the day after the declaration of war 
against Prussia, the circulation of the Bank of France (which has 
the exclusive right of issuing notes for the kingdom, empire, or 
republic, as it may happen to be) was 1255 millions of francs — 
$251,000,000 — its cash, probably including cash items, Avas 1155 
m.illions, equal to 91 per cent, of its note circulation. This large 
reserve made it, in the estimation of the London Economist, 
" stronger and sounder than any other in the world." That is 
the Avay of measuring the strength of a bank by the British theo- 
rists. It was strong because it had 91 per cent, of basis for its 
circulation. If it had had only 45 per cent, it Avould have been 
a fraction less than half as strong, of course ; but it proved itself 
strongest afterward Avhen its reserve had fallen to 24 per cent. ! 

D. I should like to see the supporting proof of such a paradox 
as that. 

T. A paradox only if your orthodox is true, otherwise not. 
This is a doctrine then on trial, and still awaiting settlement. 
Hear the evidence : 

The bank was founded in the year 1800. After 1806 it had 
the exclusive right to issue currency in the city of Paris, and 
since 1857, it has the same monopoly for all France. It exercises 
this power through about 90 branches in the departments. In 
1848, in the revolution of that 3^ear, it Avas authorized to suspend 
specie payments, and its notes were made legal tender. In 1857 
when the great financial crisis occurred in England and the United 
States, the Regents applied to the Emperor for leave to suspend, 
but permission Avas refused. The national government, by its rep- 
resentation in the board of directors, is absolute in its manage- 
ment. It is not a fiscal agent of the government, as the Bank of 
England is, yet its conduct is controlled, not by arbitrary provisions 
of its charter, but by the discretion of national authority inter- 
posed and exercised as occasion requires ; that is, the craft is 
sailed in stormy weather, not by the ordinary and orderly nav- 
igation chart, but by tlie direction of the captain. An instance 
of imperial intervention in restraint of its exactions from the pub- 
lic for its own profit, illustrates the government control : In 1860 



BANKING. 225 

the bank held 100 million dollars in gold, and 325 million in sil- 
ver. Gold at that time was at nearly 10 per cent, premium over 
silver. The standard being 15J to 1 of the respective metals, 
both legal tender at that ratio. The bank had the opportunity 
of realizing ten millions profit by selling its gold for silver, and 
paying its debts in the cheaper metal. Louis Napoleon absolutely 
prohibited the proposed speculation. The morals of merchandiz- 
ing would have warranted the transaction, but Paris would 
probably have gone into revolution if it had been permitted. 
Charters are the scriptures of corporations, to be sure, but 
the construction often dodges the legislative intention. (I once 
heard a stage proprietor say that he could drive a coach and 
four through any charter.) Prance, owing to the vast quantity of 
silver money in the hands and hoards of the people, is compelled 
to maintain its legal tender equality under the rule of bi-metallism, 
just as we are making 88 cents worth of bullion pass for a dollar 
— a policy which is mitigated by making the coin non-exportable, 
in our case, and is relieved in France by limiting the coinage to 
something near the necessity for small change, or payments in the 
smaller transactions of business. 

D. This compensation indirectly raises our silver dollar-pieces 
to the rank of the paper dollar in service and worth. 

T. Not exactly. The difference of its avoirdupois, and some 
other things are against its pretensions. It is a forced currency, 
and that takes some of the shine out of it. It does not travel on 
its own muscle. Its crutch somewhat affects the grace of its gait. 
But to our history : 

France performs political revolution, in tragedy, comedy, and 
farce, as often as Paris has a grievance, or wants one, for recrea- 
tion ; but it manages through all its irruptions, dissolutions, and 
reconstructions, to keep its finances, national and individual, in 
serviceable order. In 1870 the body politic was shaken to pieces 
by foreign and domestic war to an extreme that to any other peo- 
ple would have been ruin ; but it is said that eels bear flaying 
alive all the better for being used to it. Within ten months after 
the 19th of July, 1870, her Emperor was captured and deposed ; 
her armies were everywhere defeated ; her capital was seized, 
first by a victorious mob, and afterwards by a foreign enemy; her 
strongholds were in hostile occupa.ncy ; her territory was dimin- 



226 POLITICAL ECONOMY. 

ished, and her debt and expenditure Avere increased nearly 2000 
millions of dollars. In this period of unprecedented national dis- 
asters, the bank advanced to the government at intervals 600 mil- 
lions of dollars, and was as sound and strong at the very climax 
of this scene of desolation as at any time of peace and general 
pi'osperity in its whole history. At the onset of its crucial trials 
its great metallic reserve was the admiration of the disciples of 
the orthodox banking faith. It became their astonishment when it 
let go that anchor, hoisted all sail and committed its fortunes to the 
winds and waves of a tempestuous sea of credit, in which it was 
theoretically shown that no unballasted craft could possibly live ; 
yet after the storm subsided, it came into port all taut, its hull 
sound, its rigging all standing, and its flag floating in the breeze, 
not a fold torn, not a wrinkle in its display. In brief, the bank's 
circulation, which was 251 millions of dollars the day before the 
declaration of the Franco-Prussian war, with 91 per cent, metallic 
reserve, was in June, 1871, at the end of the venture, or adven- 
ture, one month after the treaty of peace, 573 millions, with a 
reserve of 23.8 per cent. And, wonderful to tell, on the 9th of 
November, 1876, its outstanding notes stood at 494 millions, with 
a reserve of 84| per cent.! 

P. Do I understand you to say that through all this inflation it 
kept its notes at tlie par of gold and silver? 

T. No ; but the depreciation was so trifling and for so brief a 
period that it is not worth mentioning. The only time that its 
notes fell below par was in November, 1871, six months after the 
close of the war with Prussia, when the first instalment of the 
indemnity was paid to Prussia, and then the highest rate was only 
2J per cent. Now mark this other surprise — when its notes were 
at their highest rate of discount the amount in circulation was 460 
million dollars, and by the end of January, three months after the 
first date of their depreciation, the circulation had increased to 
490 millions, and the discount had disappeared. " At a single 
step," a French annotator feels at liberty to say, " we issued 18(J0 
million francs of new notes, and this legal tender kept itself at 
par, with a parenthesis of 2| per cent, at its climax in 1871, which 
may be omitted without injury to the sense of the story." The 
figures are — circulation on 20th July, 1870, 1255 million francs ; 



BANKING. 227 

on the 31st October, 1873, 3071 millions; increase, 1816 millions; 
time, 3 years 3^ months. 

D. You have said that banks are safe when their reserve is equal 
to 25 per cent, of their circulation, even in the principal cities 
where metallic money is often demanded for foreign and domestic 
account. And you report 24 per cent, of redemption fund in the 
Bank of France at the time of its largest issue. It had then an 
ample working reserve to sustain its circulation. 

T. Safe against the home demand for specie, but when the bal- 
ance of trade is against a country, as it was against France in 
1871, when the foreign demand for the "money of the world" 
put its bank notes at a discount, self-protection drove its commer- 
cial legislation into measures of defense. After the balance 
of foreign trade in commodities was turned in favor of France, and 
the domestic credit system was freed from disturbance, the bank 
paid and received gold and silver just as freely as if it had not 
been legally released from that duty, and it could have done so if 
its notes had not been made a legal tender. We find that its specie 
increased from 731 millions of francs in October, 1873, when its 
reserve was at the lowest, to 2163f millions in November, 1876. 
The bank being all this time in what is called suspension, that is, 
released from the legal obligation to pay coin on demand. It was 
not bound to resume specie payment until 1st January, 1878. In 
fact and effect it did resume early in 1871, or as soon as the 
country was relieved from the foreign drain of an adverse balance 
of international trade. Such was its condition and credit that in 
March, 1876, when it held a redemption fund of 62.8 per cent, of 
all liabilities in cash, its shares were selling in England at 3690 
francs, the par being 1000. That year it divided to its share- 
holders 20 per cent, upon the par price of its shares, which was 
equal to 5.42 per cent, of their market price. 

P. How were the finances of the nation getting along while 
those of the bank were so prosperous ? 

T. Famously. As early as the end of 1874 the Financial Sec- 
retary reported that the whole 1000 millions of dollars borrowed 
in the loans of 1871 and 1872 had been reabsorbed by French 
capital. So the credit of the Government kept step with that of 
the bank. The question called up by this story is, I think, an- 



228 POLITICAL ECONOMY. 



« 



swered correctly b^ Lord Macaulay in his treatment of the enor- 
mous debt of Great Britain — he says: — "There is not an exact 
analogy between the case of an individual who is in debt to another 
individual, and the case of a society which is in debt to a part of 
itself." In such case, when the debt is held at home, its interest 
retained is capital in production ; labor has the benefit of its earn- 
ings, provided, as in the policy promptly adopted by France in 
her great necessity, its profits and its wages-paying power are not 
surrendered to foreign industries. 

D. I suppose we are to have the doctrine of tariff protection 
next. 

T. I suppose that you felt an inkling of it in the simple state- 
ment that France could not maintain her irredeemable currency 
and keep her home money good for all uses, when it was necessary 
to her very existence, while she was allowing her domestic indus- 
tries to suffer, and was fostering that of foreigners who contributed 
nothing to the provision for her necessary expenditure ; and, I 
suppose, you perceived that wnen France was under no necessity 
to export her " money of the world," she found that her own was 
every way sufficient for her. In other words, that she protected 
her life by protecting her labor and productive industries, under 
compulsion of the demand for some contribution toward her ex- 
penses from those who enjoyed her markets. Then France found 
that the reciprocity treaty with England had delegated too much 
of her proper sovereignty to the foreigner to comport with her 
domestic welfare, and that she must bar out the tramps who were 
trespassing upon her domain. But, let us not cross the bridge 
before we come to it. Let me say, however, by way of notice, 
that I believe the whole farago of adequate metallic reserve 
and legal tender might be left to the doctrinaires who occupy them- 
selves with gnawing those old bones, if only international trade 
were effectively deprived of its mischiefs. Business and currency 
within national boundaries and in and under national order can 
take care of themselves. 

P. I understand that the Bank of France, in the midst of the 
greatest strain upon its resources, when fear must have taken the 
place of faith and hope, instead of contracting its issues, as the 
solid basis system requires, to the measure of its reserves, actually 



BANKING. 229 

enlarged them in immense disproportion to the fund which it held 
for their redemption ; and that, nevertheless, the notes in such 
immense excess maintained themselves at the par of gold. Can 
an irredeemable currency possess in itself such potency ; or in 
Avhat extrinsic aid may we find the required power ? 

T. That note circulation did not maintain itself at par when the 
balance of foreign trade requiring the export of gold existed; and, 
if the adverse balance had long continued, the currency must have 
depreciated, as it has done in so many other cases, to 50, or even 
a heavier discount. Nothing less than dollar for dollar in metallic 
reserve will keep a circulating note currency afloat under a gen- 
eral run for redemption. All experience proves that 25 per cent, 
of coin is more than is required to meet the current necessities of 
home business, when confidence prevails, for opinion and sentiment 
are potential in money matters as much as in any department of 
human affairs. In times of political revolution it is treason to 
doubt the fortunes of the republic ; and the public faith never 
fails when it is most needed. After the armed foreign invasion of 
France was withdrawn, and the commercial invasion had been 
barred out, the reserve of 24 per cent, was found more than ade- 
quate by the bank. There is no mystery in the portentous phe- 
nomena of this history, except the mystery of faith resting upon 
an assured defence against the hostility of foreign trade. 

P. When I interrupted you for the purpose of getting a more 
familiar command of the principles of the bank system, you were 
about to enter upon the economic rules which govern the paper 
money supply. 

T. All departments of knowledge that relate to practice are 
two-sided. They divide themselves in study into theory and art — 
a directing spirit and a working body. They are distinctly one. 
The force and use of the one is manifested through the other, and 
they test each other. The banking system is the machinery of its 
principles. The circulating note is the common instrument of the 
common credit system. The note, unlike the check, draft, or bill 
of exchange, serves in the commonest, broadest, and most essen- 
tial business of the people. It is their money, and is mainly used 
in their retail transactions. The wholesale credit money of capi- 
talists has not the same use, and does not need the same medium. 



230 POLITICAL ECONOMY. 

The circulating note is ever on the wing. It has no leisure to earn 
interest for the holder. Its travels and adventures would be such 
a history of the common life of society as never yet was written, 
or ever will be. During the eighteen years following the suspen- 
sion of specie payments in the United States, which commenced in 
December, 1861, in connection with an equal amount of Treasury 
notes, or greenbacks, of substantially the like character and use, 
these notes were the currency of the country. Gold and silver 
money being demonetized, and at a very high rate of premium, 
were driven out of the common service. Here we have the vast 
business of a nation, growing from thirty-two to over forty -five 
millions of people, and with a capital wealth rising from less than 
twenty to above forty millions, measured by the money in use ; a 
war expenditure of quite five thousand millions above that of any 
other five years of peace, and carrying on besides permanent 
internal improvements of unparalleled outlay, — all effected by the 
agency of a paper money usually styled irredeemable, and ac- 
tually inconvertible at its face value into the " money of the world." 
This inventory would be complete only if we could put into it the 
items of its service as a medium for effecting the exchanges of 
commodities and services of a people who in the time lived through 
the ordinary experiences of a hundred in a score of years. 

Is there anything in this story, or is there anything yet to come 
of it, to keep in countenance the financial disesteem of theorists 
for the circulating note ? It had not the cosmopolitan reputation 
of a " world's money," but it did gallantly earn and vindicate the 
claim to the worthier title of American money. It never deserted 
its own standard, or went into foreign service. It bore the stripes 
of the conflict, and kept burning with its stars till its victory was 
achieved. 

P. Yes, yes, they redeemed the nation while yet unable to 
redeem themselves. How long did they stand, and how low did 
they sink in the broker's scale of equivalents ? 

T. They went down from par in December, 18G1, to 285 for 
100 gold, in July, 18G4, and recovered their exchange equality 
before the 1st January, 1870. But in all this period of eighteen 
years, except in the payment of old debts, and in the value of 
salaries and annuities, they balanced relative values in current 



BANKING. 231 

exchanges as well as gold could. have done. They raised market 
prices to a substantial equivalence ; that is, they took care of the 
live business of the period, leaving the dead to take care of itself. 
Limited, under the adequate reserve doctrine, at the rate of one 
for one, they would have been as miserably scant in supply as the 
"precious" must have been ; yet, judged even by the arbitrary 
standard, they eventually fulfilled all their promises. Just as soon 
as the Treasury began to pay its debts in the world's money they 
discharged theirs, and now they outrank their rival. The national 
Treasury will not exchange them for gold. But this is only inci- 
dental to our inquiry into the machinery that supplies them. 

P. The provision of currency, being the prerogative and the 
duty of the civil government, the mechanism or organization of 
the agencies ought to be prescribed, in order that unity of action 
and aim among them may be controlled and secured ; and for this 
reason the whole system should be held within the jurisdiction of 
the national authority. Making in effect a multitudinous national 
bank, as the mint that coins the metallic money is the national 
provider of its kind of circulation. 

T. With the difference that the issue of paper money is not a 
mere mechanical action upon a raw material having an intrinsic 
value, by change of form and authentication of weight. The cir. 
culating note has no other than a service value. These two kinds 
of medium are not so exactly alike that they can be treated as 
subject to the same management in all particulars, though they 
answer the same common purpose. In one respect they are alike : 
a national Treasury office cannot, any more than a national Mint, 
perform the functions of a bank of discount and deposit, and in 
no proper sense, that of a hank of issue — that is, it cannot be a 
dealer in the money market. The office of the sovereignty is not 
the management of business exchanges. All our paper currency 
now is directly or intermediately a promise of redemption by the 
Treasury. Our greenbacks and national bank notes are in this 
alike. In another respect they are unlike. The greenback is 
simply an assurance of its own value ; the national bank note 
combines private responsibility with that of the nation. The 
nation is no farther involved in the administration of the general 
banking business than as security for its credit currency. 



232 POLITICAL ECONOMY. 

Observe that a bank may be styled national, which is only a 
fiscal agent of the government, as was the Bank of Venice, and 
that of Genoa, or as the Bank of England, or the old Bank of the 
United States might be so styled. In our present use of the term 
it means only that the general system is, to a limited extent, 
under the warranty and control of the government : the conduct 
of the individual institutions in their business with the community 
being under the management of the private shareholders. 

P. The proposed abolishment of the national bank circulation, 
and replacing it by an equal or sufficient amount of United States 
notes, or greenbacks, would not take aAvay the necessary agency 
of banks, or money offices, if the national Treasury cannot per- 
form all the offices of the banker. All the difference which such 
a displacement of the bank notes, and replacing them by green- 
backs would be, making them read "the United States" instead 
of " The National Bank " of will pay to bearer dollars. 

T. That difference would be nothing in the value or security of 
the note. But it might open the way to a release of the substi- 
tuted institutions from the existing supervision of the government ; 
and their customers and the general public might be left to such 
care or carelessness as the many-headed and many-minded State 
governments would substitute. Congress could forbid any other 
circulation than its own issues ; but there its control would neces- 
sarily end. The convertibility would not be better assured in 
promptitude or certainty. But I have not seen, nor can I im- 
agine any analysis of the system proposed that is clearly under- 
standable. I have met nothing in its argument but faults alleged 
against the system which it attacks. Nothing whatever amenda- 
tory in the proposed change. 

P. I did not intend to introduce a discussion in the form of a 
debate with the Greenbackers. I merely desired to have the 
requirements of a banking system canvassed. 

T. The banking system, resolved into an instrument, a sub- 
medium, ancilliary to the money medium, its use is essentially, 
indeed wholly, in its co7ivenience, and this quality and character 
must rule its policy all through its details. Not only the currency 
which it supplies, but the collocation of its places of business are 
recpiired to be convenient as depositories, as clearing houses, as 



BANKING. 233 

reservoirs and distributors of money through the channels which 
lead to its appointed work. As administrators of all these offices, 
banks are required to be adjusted to vicinages of such areas and 
business activities as will bring home their services or make them 
handy. Their number should be limited by no other conditions 
than convenience of location and conformity of expense to the 
service they are to perform. 

D. Admitting these requirements as to the distribution, and, 
resultingly, to the number of these money-shops, it does not follow 
that they should all be incorporated, or all supplied with circulat- 
ing notes of their own issuance. 

T. Under the existing system the notes are of nowhere in par- 
ticular and everywhere in general. Whether put into circulation 
by a corporation in Maine or in Dakota is indiiferent. They are 
universally good, and equally good, whether the particular bank 
that promises to redeem them is broken or sound ; but it is some- 
thing to have them under such supervision, impulse, and restraint 
as makes of the whole of them one body, governed by one head, 
so far as the parts can be put under its direction. 

P. There are now above two thousand of these national banks 
in the United States. Is this number found to answer all the ends 
in view ? 

T. The distribution and location are left to adjust themselves 
in perfect freedom, and to correct their errors as freely as to make 
them. Some of these banks go voluntarily into liquidation. They 
are governed in place, number, and capital, as all other business 
is, by the circumstances around them. In this respect it is the 
freest and best system of banking that ever was devised. 

This policy is like that long in operation in Scotland, which 
is agreed, on all hands, to have better borne the test of time and 
experience than any other under the old time regime in Europe or 
America. They have been distinguished by their freedom from 
disturbing fluctuations in the amount of the currency which they 
circulate, and by their complete exemption from those epidemic 
failures which have so frequently visited England and the United 
States. Single and singular failures have happened in perhaps 
half a dozen instances within the present century through fraud 
and folly of the directors, just as "accidents happen to the best of 
16 



234 POLITICAL ECONOMY. 

families." But they have earned and enjoyed a reputation among 
the people, high and low, so well assured that in Scotland there is 
no horror or terror of banks, no distrust, and none of that per- 
petual endeavor at change in policy which constantly agitates the 
other peoples who are still trying to make the old bottles hold the 
new wine of financial revelation. 

P. If the Scotch banks enjoy such public confidence, what is 
the manner and what the means of securing a trust so constant and 
complete ? 

T. Mark well, and inwardly digest their peculiar policy. They 
allow interest upon deposits at only 1 per cent, below the current 
market rate, and so enlist the whole mass of provident people in 
their support ; for a vast popular interest is thus at stake upon 
their solvency. They lend money upon bonded securities— a sys- 
tem which would break banks in any degree tender in reputation, 
or devoted to the main and governing notion of convertibility by 
adequate reserves in cash. Their customers thus get operating 
capital on loan in advance, instead of waiting until they have the 
proceeds of their enterprise in notes of hand for discount; that is. 
It is not on values already produced or earned, but on those to be' 
earned by aid of credit, that the borrower receives timely aid from 
them. They are really and effectively credit agencies. Besides 
all these conveniences provided by the Scotch banks for the indus- 
trious public, they issue notes as low as one pound. No old fo^y 
fear of driving out the "precious," which is never adequate, by 
Its substitutes, you see. Another reversal of the popular and es- 
tablished doctrines of the money laws. On the contrary their 
money system looks to the common weal in all its workings It 
takes care of the people and they take care of it. 

P. Does the distribution and collocation of money offices in 
Scotland tally with that of our own country under our present 
system of bankino- ? ^ 

T In 1870 Scotland had 11 banks and G89 branches, say 700 
banking offices. The population at 3,400,000 would average 1 
such office to 4857 people of all ages. They are distributed over 
an area equal to only two-thirds of that of the State of New York 
with a population 30 per cent. less. It is said, upon authority,' 
that they extend into every village in the kingdom. In general 



BANKING. 235 

average it had 1 banking office to 84 square miles of territory ; 
Pennsylvania had then 1 to 232 square miles ; New York, 1 to 
150 ; Massachusetts, 1 to 38 ; Rhode Island, 1 to 21 ; and Ohio, 
1 to 296. These territories divided into equal squares would give 
a radius, or half diameter, of 4J miles to Scotland; to Pennsyl- 
vania, TJ miles ; to New York, 6|- miles ; to Massachusetts, 3 
miles ; to Rhode Island, 2-f^ miles ; and to Ohio, 8| miles. This, 
however, presents the plat without distinguishing the varied occupa- 
tion of space in cities and villages, in mountains and plains. If 
the proper adjustment to population and business were made it 
would probably bring the banking offices of Scotland quite up to 
the allotment of Rhode Island. 

In 1871 Scotland had a total population only equal to 14| per 
cent, of that of England and Wales, but it had then a note circu- 
lation equal to lOylg- per cent, of theirs ; having a requirement no 
larger comparatively than as Edinburgh compares with London, 
and Glasgow with Liverpool. A circulation one-half less would 
scarcely put it on a level, their respective business requirements 
being considered. In fact 1 to 20 would not be too much. 

As a general judgment carefully formed of the Scotch banking 
policy, I submit an extract from Mr. Colwell's Ways and Means 
of PaymPMt, p. 425 : — " In Scotland the preference for a paper 
currency is strongly marked in all the channels of business. 
Neither the Rebellion of 1715 nor 1745, nor the disturbances 
following upon the French Revolution of 1793 and 1797, Avhich 
stopped the Bank of England, nor the grand crash among the 
English banks in 1825, could alarm the Scotch people or produce 
a run upon their banks. No currency of modern times has been 
more efiective and less fluctuating in value and quantity than that 
of Scotland. This is expressly admitted by Committees of both 
Houses of the British Parliament." 

Let me introduce another quotation from the same author : " An 
opinion has grown up and become a law in the act of 1844 (the 
charter of the Bank of England), that a paper currency, to be 
perfect, should fluctuate as a- gold currency would do, if it were 
the sole medium of payment. To the mind of a Scotch banker, a 
greater absurdity could not be presented in as many words. He 
would say: 'What! when a demand springs up for gold, in con- 



236 POLITICAL ECONOMY. 

sequence of some foreign war, must we so regulate the issues of 
our banks as to reduce the currency of notes in the proportion 
that the currency of gold is carried off? Rather should we in- 
crease our issues, and supply the place of the currency that is 
exported.' " 

P. What is the quantity or proportion of bank notes required 
in the business of Great Britain, France, and the United States ; 
or at what figure would the provision of notes be clearly below 
the requirement, and at what amount Avould they reach the stage 
of what is called inflation ? 

T. The data for a calculation are exceedingly uncertain. Their 
volume for the service of business cannot be fixed even for an 
approximate estimate. Under any determinate amount the pro- 
vision arbitrarily made and limited is sometimes too little, and 
sometimes redundant. Money of all kinds is thus under the laws 
of trade as other commodities are. Estimates made for any time 
or place in arithmetical figures are not worth the trouble of the 
inquiries and conjectures. Our amended national banking system 
has upon good grounds fairly abandoned the problem. In some 
parts of the country a very large part of the payments made re- 
(juire money ; in others only an infinitesimal quantity is used or 
necessary. Where there are few banks or bankers, much money 
in form is needed ; where banks acting as clearing-houses abound, 
more than nine-tenths of all payments are made by set-off, or an 
exchange of debts for credits. In the season of the year when 
our agricultural products are being moved from the West to dis- 
tant markets much casli is in demand. 

And as to difference of place : In California there has usually 
been more than twice or three times more in circulation than in 
Virginia. In the Southern States a very considerable increase is 
required since the emancipation of the laborers. Moreover, just 
as exchanges are better regulated,— that is, as banks and clearing- 
houses gather up debts and credits, and balance them against 
each other, money is eliminated. For example : England and 
Wales reduced their circulating medium in the ten years, ending 
in 1874, more than 18 per cent. ; while the exports and imports 
of ]]ntish and Irish products increased above 40 per cent. 

You see that a circulation of cash should be elastic, and that its 



BANKING. 237 

volume should expand and contract like a spiral spring to effect its 
adjustment to service. 

P. A spiral spring has the convenience of meeting the weight 
it is intended to support ; and it would be an odd sort of a balancer 
if it Avere wedged up or tied down to a certain notch on the regis- 
tering disk. 

T. You have fairly disposed of an arbitrary maximum and 
minimum in the mensurer and supporter of a variant pressure. 
The national bank constitution has perfect provision for every 
change in the movement of the business it is intended to serve. 
It is limited, on the one side, only by the securities pledged, and, 
on the other, it adapts itself to the range of the requirement with- 
out any jar or break in the machinery. 

I). The opponents, however, allege that the plan affords a 
doubled profit upon the circulating notes issued from the Treasury 
to the banks, — that they draw interest upon the bonds deposited 
as securities, and another interest upon the circulation based upon 
these same securities. 

T. I can't think of going into a party wrangle. That would 
carry us away from the drift of our inquiry into the fundamental 
principles of banking and currency. We find switch-tracks enough 
along our own thoroughfare that are not quite avoidable. But I 
consent to a digression long enough and wide enough to show that 
the objection, as you present 'it, is too broad for the facts on which 
it is made to rest. 

First. The national bonds deposited, paying 4, 4J, 5, and 6 per 
cent., are as much the property of the shareholders, and as much 
entitled to the accruing interest as if they were held in unincor- 
porated hands. They are as liable to redemption and to refund- 
ing at lower rates of interest as if they were held by any indi- 
vidual in the nation. Does the objection lie against the payment 
of interest upon them ? 

I). Of course not. But the other interest that the banks make, 
or may make, by lending the notes which represent exactly the 
same property-right and resulting interest which they have in the 
bonds. That is the matter to be disposed of. 

T. How much, or whether there is any profit arising from the 



238 POLITICAL ECONOMY. 

circulation, ought to be settled, in order to get at the answer to 
this allegation. 

D. In NcAv York loans carry a legal interest of 7 per cent, per 
annum ; in other States not less than 6 per cent. ; and, in some 
parts of the country, 10 per cent., or larger, if fixed by contract 
between the borrower and lender. 

T. You have stated the legal rates chargeable and recoverable 
under the laws of the local legislatures ; but you have not ascer- 
tained the actual net rates realized by the banks. Be careful 
that you do not over-charge the product of the privilege which 
they enjoy. 

D. I am not sufficiently acquainted, for the purpose of this 
calculation, with the amount of the abatement that may be claimed 
from the customary rate of profit upon the sum delivered to the 
banks for their use. 

T. Neither can I act as an accountant to settle this point with 
any one of the institutions, nor with the whole of them ; but let 
me submit some of the facts that are involved in the question. 

In the first place, a fair presumption arises from the fact that 
the opportunity for securing the advantages of this circulation is 
open to all capitalists, to an unlimited extent, yet the fact is that 
when, in November, 1879, the organized banks were entitled to 
draw from the Treasury 388 millions of notes, there had been 
issued to them only 319| millions, leaving not called for 68 mil- 
lions. If the circulation were so profitable as is alleged, why did 
they not avail themselves of more than four-fifths of the amount 
which they were entitled to ? 

But still more decisively as to the charge of a double interest 
upon the investment in the bonds pledged for the note securities, 
the Comptroller, Avho must be allowed to understand the force and 
eft'ect of the figures which he handles, shows that subtracting the 
taxes. National and State, imposed upon their circulation, the net 
profit would be no more than l^g- per cent, upon the amount 
which they deposit in bonds for security if they loaned them at 8 
per cent., and If^ per cent, if at 6 per cent. 

D. There may be causes operating and abating the profit upon 
circulating notes which withhold outsiders from rushing for them 
upon the issue department of the Treasury, and also restraining 



BANKING. 239 

the national banks from drawing their full allowance. I have 
already said that I am not sufficiently acquainted with the pros 
and cons of the case to meet the apparent facts that bear upon it. 

T. For the details and proofs of the Comptroller's calculation, 
I must refer you to his annual report of 1879 — you will there find 
its conclusions thoroughly sustained. 

The difference between the loans of these notes at 8 and at 6 
per cent, may be averaged at, perhaps, one and a half per cent., 
but there are other items that so far diminish the profit on them 
as may possibly reduce it to nothing. The circulation ought to 
be charged with its proper share of the banks' expenses in the 
conduct of their business, and of the losses sustained by default 
of the borrowers. Now the total losses of the national banks in 
the last four years have averaged above $20,000,000 per annum ; 
and the current expenses over $6,000,000. That one and a half 
per cent, net profit over the national taxation upon the circulation, 
the bonds being assumed to be reduced to four per cent., as they 
are rapidly being, will hardly cover losses, expenses, and the con- 
stantly declining market value of the bonds as they approach 
maturity, which last item of abatement of profit must also be 
considered as these bonds must be purchased by the shareholders 
at a premium which will be totally lost when they become paya- 
ble, and are losing that premium all the while, until they shall be 
worth no more than their face value. What now has become of 
the alleged double interest so much complained of ? 

P. Assuming that banking profits proper must come from loans 
and discounts (excluding the investments in United States bonds 
and other stocks), I have been looking, since our last meeting, at 
the ratio that they bear to the circulating notes, as their means of 
business profits. Let me submit the results : — 

In October, 1879, 2018 national banks reported their aggregate 
loans and discounts at $878,503,097 ; their circulating notes, less 
the amount on hand or unused, $297,078,812. Thus the notes, 
active and outstanding, were but 33.8 per cent, of their loans and 
discounts, or say one-third of their profit-making means employed. 

The average of the notes to the loans of the 6 years (1871-79), 
fell to 32.01 per cent., and of the half year ending 11th of June, 
1880, they stood at 29.88. 



240 POLITICAL ECONOMY. 

But I was especially interested by the unlike employment of 
these notes by banks, situated as to their respective business com- 
munities. My examination shows that the larger the centres of 
business, the less is the proportion of notes used, and the largest 
institutions in the same localities, having the larger amount of 
deposits, usually employ the less amount of notes drawn from the 
Treasury, indicating that the promise of profit from their use is 
not, in itself, as inviting as might be supposed on the supposition 
that they are a means of deriving a double interest on the bonds 
deposited for their security. For instance : — 

The circulation of national bank notes by the country banks 
of Massachusetts is equal to 60| per cent, of their loans and dis- 
counts; while that of Boston is 31.2 per cent. The country banks 
of New York State, 45.4 per cent. ; that of the city, but 11.4 per 
cent. Of Pennsylvania, 54 per cent. ; of the city of Philadelphia, 
20.8 per cent. That of Maryland, 53.4 per cent. ; of the city of 
Baltimore, 29 per cent. The State or country banks of Ohio, 52.8 
per cent. ; of Cincinnati, 27 per cent. The State of Illinois, 
38.2 per cent. ; of Chicago, only 3.34 per cent. There are further 
proofs in the same direction, or that the larger banks employ the 
less of this kind of currency. The Fourth National Bank of the 
city of New York has but 5.78 per cent, of its loans and discounts 
in notes of its own. The Chemical Bank has none at all ; its loans 
and discounts amounting to upwards of 9 J millions; its business is 
based upon its capital, surplus, undivided profits, and deposits, 
aggregating §14,616,835. The Fulton Bank of the same city 
employs none of its own notes ; and the City Bank, also, has no 
notes outstanding ; its loans and discounts are within a fraction of 
7 millions, its deposits 9| millions. All the other banks of that 
metropolitan business city have only a very small percentage of 
their public accommodations in national bank notes of their own 
issue ; aggregating and averaging only 11.4 per cent, of their 
loans and discounts as against those of the country banks of the 
State, which reach 45.4 per cent. 

To the like inference, the several States of the Union which 
have a less active business exchange, have a proportionately 
greater national bank circulation. Their money medium being 
proportionately the greater to tlieir means of settlement of balances. 



BANKING. 241 

Thus, the notes used in ratio to loans and discounts in West 
Virginia are 66.4 per cent. ; in Georgia, 61 ; in Florida, 62 ; in 
Alabama, 76 ; in Kentucky, 63.6 ; in the District of Columbia, 
93 ; and in Washington City, 58.2 ; or, in the District including 
the Federal City, 64 per cent. 

Indeed, so well and generally is the use of the circulating note 
employed in inverse proportion to the wealth and business activity 
of the regions, that their rank might, other circumstances being 
allowed for, be estimated by their relative amount to that of the 
general credit system. 

You have elsewhere said that the measure of fixed to floating 
capital in a nation, or state, or community, is the truest measure 
of its real wealth and grade of civilization. In the proportion of 
the circulating money medium to the total exchanges of a people's 
business, it seems to me that a like indication of their business 
prosperity may be seen. Or, as you have said, the more and more 
perfect organization of exchange values that is eifected, money in 
form of coins and notes is the more and more eliminated, and credit 
is substituted for cash. 

T. In making the general statements and the inferences from 
facts which I believe support them, I do not submit them to the 
exact figures of statistical reports. In them you find more of 
bookkeeping rules than of practical issues; and, they are, besides, 
subject to many modifications of their apparent footings and bal- 
ancings. You were, perhaps, surprised to find that Chicago had 
but '^\ per cent, of its loans in its outstanding bank notes, while 
Boston had above 31, and New York City had 11.4. The expla- 
nation, probably, is that Chicago sold its deposited bonds when they 
were commanding a high premium, and depended upon its deposits 
for its current cash, while the two other cities had their own reasons 
for a larger use of or reliance upon their note circulation. Figures 
are not responsible for the facts which they seem to represent ; 
and, especially, they do not support all the deductions which in- 
expert people draw from them. With the required allowances, I 
think your investigation of the bank reports fully sustains your 
conclusion that the circulation of the national banks, where they 
have other profitable resources, is not an attractive investment, and 
that it is mainly used only by the institutions which have corapara- 



242 POLITICAL ECONOMY. 



1 



tivel}'' small deposits to work upon. You will doubtless have ob- 
served that the smaller banks in the principal cities have a circu- 
lation of outstanding notes greatly larger in proportion to their 
business dealings than those which have a higher standing with 
the people. Conditions are always to be considered, outside of 
arithmetical results. I have no doubt that twice two make four, 
but it is equally certain that the doubling of an excise or impost 
duty does not yield a double revenue. Our Congress has time 
and again ventured upon that solution of the tax problem and al- 
ways failed of the expected product, sometimes by subtraction, 
sometimes by multiplication, under the rules of arithmetic, with 
uniform disappointment. Just as some people imagine that an 
increase of money issued must increase its quantity for use — which 
is a similar mistake. 



CHAPTER XIX. 
INTERNATIONAL TRADE. 

D. I am glad that we have reached the subject of commerce. 
The discussion of its topics threatens less friction with the au- 
thorities than we have had up to this time. The pervading philan- 
thropy of international association in business affairs has an ob- 
vious tendency to make " the whole world kin." Its ministry in 
the distribution of nature's beneficence, which is partial in allot- 
ment, as if for the very purpose of compelling interchange and 
effecting a virtual partnership in the cultivation and interchange 
of the products of all regions, climates, and capabilities of the 
earth, — must meet the aspirations of a universal brotherhood, and 
tends as far towards communism and cooperation as can be made 
to work smoothly in the plan of universal association. 

P. Oratory and poetry, impassioned by universal benevolence, 
concur in regarding the commerce that brings distant nations, and, 
unlike tribes of men, into familiar, reforming, and ameliorating 
mutuality of influence upon each other, as a civilizer, educator, 
wealth-producer, harmonizer, and organizer of the world's social 
and industrial interests. 



INTERNATIONAL TRADE. 243 

T. Between you, you have drawn a sufficiently correct copy of 
the usually highly colored picture of all the virtues of interna- 
tional trade, paraded in solid column, and in full march upon all 
the evils of the five quarters of this disordered globe, with the 
millennium in purpose and perspective ; civilization chivalrously 
devoting itself to the redress of all the ills of barbarism, and to 
the happy reformation of all the inequalities in the conditions of 
the more advanced nationalities, — the armies of trade spreading 
the tidings of great joy to all peoples, — cosmopolitan philanthropy 
bearing peace and goodwill to all men! ! " How beautiful upon 
the mountains [and the seas] are the feet [and fleets] of them 
that bring good tidings, that publish peace ! !" (Isaiah lii. 7.) 

But allow me to call your attention to some of the facts of this 
history — a very different picture, truly. The North American 
Indians have not prospered in their international trade. It does 
not seem to work well among parties in greatly unequal condi- 
tions. Hunters do not improve their hunting-grounds by trade 
with those who cultivate theirs. That may be owing to the utter 
incapability of the savage ; but, among a people much less un- 
equal by qualification for the strife, how is it ? A member of the 
British Parliament lately said, " Some of the finest tracts of land 
in India have been forsaken and given up to the untamed beasts 
of the jungle. The motives to industry have been destroyed. Go 
with me to the northwest provinces of the Bengal Presidency, and 
I will show you the bleaching skeletons of 500,000 human beings 
who perished from hunger in the space of a few short months ; 
yes, of hunger, in what has been called the granary of the world. 
Famines have continued to increase in frequency and extent under 
our sway for more than half a century." Foreign trade in this 
case shows no signs of benefits conferred upon the weak by the 
strong. Here it seems the divine order is reversed. The angels 
of traffic do not minister unto the heirs of salvation. 

Under the influence of international trade Turkey has become 
" the sick man of Europe." The Portuguese, once the masters of 
maritime commerce, as you fondly call it, have changed places 
with their former victims. In the language of Mr. Cobden, 
" Turkey and Portugal have become a burden and a curse to 
England." And how have Ireland and the West Indies fared ? 



244 POLITICAL ECONOMY. 

The apologists of the system urge in explanation of the mischiefs 
which it works : The Turks are Mohammedans ; the East Indians 
are Pagans; the Irish are Celts; and the Portuguese, though Cau- 
casians, are Catholics. These are the reasons why the ameliora- 
tions of foreign trade have not resulted to them. But they had 
all these characteristics before England had made herself the 
workshop of the nations and the mistress of the seas. Something 
has happened since " her march was o'er the mountain wave, her 
home was on the deep;" since she has needed no protecting 
" bulwark" against her former rivals in maritime trade. 

In sober truth this trade, until within the period of a couple of 
centuries, was simply what we now call piracy. Its occupation 
was pillage of chattels, chattelizing of men, and the extension of 
political dominion for the maintenance of industrial supremacy. 
Sir Walter' Raleigh went abroad upon the high seas with Eliza- 
beth's commission as a privateer ; and John Newton, after the 
birth of Washington, went into the slave trade on the coast of 
Africa, with an outfit of hymn books and hopples, prepared for 
the civilization of the heathen I The slave trade, as a branch of 
legitimate foreign commerce, Avas not abolished either in England 
or the United States until after I was born. In fact the morals 
of maritime adventure and trade were the last to be reformed in 
the conduct and policy of international relations. 

Have I overstretched or overcolored the history and character 
of this thing which you call commerce, as if it were an equitable 
interchange of advantages ? 

D. But it is now, and has been for a long time, the subject of 
public law and treaty, having peace and equity for their aim and 
rule. 

T. Aye, the trade has given up the instruments of violence for 
the equally effective agencies of peace. Changing with the 
changes of times and manners, it now makes its predatory inva- 
sions in the force of traffic for the subjugation of every feebler 
member in the general scramble of aggressive competition ; 
seldom and unnecessarily in these later days, using the power of 
arras to open the way for the superior skill of hands, and the 
domination of larger capital. 

D. Oh! I understand. A paper partition substituted for the 



INTERNATIONAL TRADE. 245 

Chinese wall of defence against the Tartar invasions — a protective 
tariif for an effective barrier against cosmopolitan commerce with 
its destructive intendments. Ah ! 

T. 1 do not choose the alternative of seeming either a fool or a 
fanatic. I would have national independence maintained by a 
policy of foreign trade strictly defensive — nothing more, nothing 
less, and nothing else. 

To state the law and gospel of international trade — its liberty 
and proper limits — it is, in general terms, allowable only where 
and when it is in the nature of things unavoidable, or when and 
where the welfare of the parties demands it. In other words, 
there cannot be legitimate trade freer among nations than betv;een 
individuals ; otherwise it is not commerce in the proper meaning 
of the word. Or let me condense the rule into this form : all 
exchanges of property and services are in their true character 
compulsory . Is that statement broad enough ? 

B. It is a broader bit of logic than I thought a protectionist 
would avow in debate. In that attitude it offers fight at great 
odds to the opponent. 

T. Then let me lay out its length and breadth by metes and 
bounds in full survey. In my apprehension of its principles and 
operations, it provides for, and allows, the barter of surplusses of 
natural or accidental differences while they exist. It levels the 
hills and lifts the valleys of industrial capabilities ; it interchanges 
the advantages of all parties differently conditioned, and secures 
each in the benefits of its own, and in fair participation in those 
of every other ; thus serving the aggregate man of all nations, 
as the hand helps the foot, and the eye supplements the ear in the 
individual organism. And more especially, and above all else, it 
so coordinates exchanges of the common interests, that it suffers 
none of the agencies to interfere with any other. This, its appro- 
priate rule and governance, is grounded upon needful and helpful 
differences between the parties engaged in such interchanges, 
which is the only rightfully called commerce, contradistinguished 
from its abuse, which I choose to call trade, when the character 
of exchanges are designated by their differences of effects. 

The proper meaning of the word commerce, confines its appli- 
cation to exchanges of differences. Reduced to its logical and 



246 POLITICAL ECONOMY. 

practical significance, commerce between nations means, or should 
mean, supplementary supplies, not competitive traffic. It means 
the harmony of varieties, not the domination of advantages. It 
means, if not etpial, at least common benefits, in which each of the 
contracting parties has its interests promoted. Any other system 
of trade is simply spoliation, Avhether between nations or individ- 
uals. Commerce is not virtual w^ar under j^acific forms ; it is the 
peace of equal justice. 

Moreover, commerce is not lawless. It is conditioned, not 
unconditional. It must be held in keeping Avith its proper service. 
Its broadest and most constant condition is in the necessity of im- 
porting whatever of the useful cannot be produced at home ; 
whether from hill or valley, stream or mine, or soil, or from a dis- 
tant country. In respect to natural products — the temperate 
zones must bring the products of the torrid and the frigid from 
the climates and soils and seas which yield them, if they would 
have them. We must get our finest furs from the north, and our 
spices from the south. Commerce in such commodities must be 
across climates. The like natural law applies to wines and wheat, 
to ice and ivory, and to all things dependent upon topographic 
conditions. In these cases, and to this extent, and with these 
limitations, commercial exchanges are swpplementary , indispensa- 
ble, and unchangeable, because they are always free from compe- 
tition and the mischiefs incident to it. 

Such are nature's laws ; and customs must either war against 
them or conform to them, with the inevitable results. 

i>.. How about the domestic substitutes for such climatic pro- 
ducts? Cotton, produced in Texas, rivals the silk of India; the 
fermented lujuors of regions that grow no grapes meet foreign 
wines in the home market. Would you bar out the real in favor 
of the imitation ? 

T. You have not mentioned a perfect substitute, nor do I think 
you can find one, in a wholesale or retail inventory of goods any- 
where on sale. Beer is not wine for all uses ; neither is cotton 
the identical alias of silk. A preference of taste, or of economy, 
is a matter for settlement which does not involve the principle of 
domestic against foreign competition. The new, even when it 
displaces the old, works itself into use which municipal law can 



INTERNATIONAL TRADE. 247 

neither help or hinder. It defends itself against all rivalry, ex- 
cept that of its own kind in international trade. All progress is 
arbitrary change by substitution. 

_D. Inasmuch as protective tariffs are mainly constructed in ref 
erence to manufactures, and very seldom embrace raw materials 
in their defensive provisions, free trade as commonly plants itself 
against restrictions upon the importation of artificial products. 
And I do not see that you gain either time or strength by develop- 
ing the exemptions of articles that are governed by climatic laws. 

T. You are now, perhaps inadvertently, but none the less cor- 
rectly, arraying free trade against the interests of skilled labor, 
with a decided favoritism to that drudgery of industry which holds 
it to the grade that belongs to the earlier stages of civilization. 
Think of that. Manufactures in their modern condition employ 
the natural agencies that mark the advancement of society. Agri- 
culture without their aid and reflected influence is simply the bar- 
barism of art. But to your objection I present the true system of 
defensive import duties as the only one that can relieve all non- 
competing imports from taxation. Its exemptions stand upon the 
principle that supports and authorizes its restrictions ; while a 
tarifl" for revenue only is in essence and operation taxation inflicted, 
like domestic excises, upon values, without regard to any other 
interest than that of the national revenue. Notice this grand dif- 
ference. Free trade is taxation in its intention and operation ; 
but protection, on the contrary, intends the defence of domestic 
industry. When you use the word taxation as an epithet be careful 
to apply it where it logically belongs. 

D. You do not put artificial products upon the same ground 
with the natural, in respect to international commerce. 

T. The difference between them is the ground of dispute about 
them. 

D. I always thought that there is a good deal of complexity, if 
not confusion, in the doctrine, as well as in the framework of pro- 
tection. Manufacturers frequently complain of the inequality and 
injustice of the rates imposed by its schedules of duties ; and, as 
to the policy, did not Mr. Clay and Mr. Webster throw the weight 
of their advocacy upon the right of countervailing duties to meet 
and punish foreigners who taxed our exports in their markets ? 



248 POLITICAL ECONOMY. 

An argument, by the way, that had great show of justice or 
retributive justice, at least, while its provocation continued ; but 
lost all its force when the free trade system of England was inaug- 
urated. Others, in the past and present time, rest the fostering 
care of our manufactures upon their i7ifanni/ — -the helplessness of 
their immaturity — thougli they have enjoyed the nursing of about 
a sixty years' minority, which, if by nature capable, ought to have 
come of age by this time. 

T. Mr. Clay and Mr. Webster were politicians, or, if you will 
have it so, statesmen of their time, and naturally addressed them- 
selves to the exigence in which they were involved. The phi- 
losophers of the party, even in their day, had other reasons for 
their oi)inions ; and, in the changes that time brings Avitli it, we 
are certainly at liberty to rest the doctrine upon its fundamental 
principles, which abide under all changes of outside conditions. 
Besides, both Clay and Webster were, through the Avhole period of 
their interference, candidates for the presidency of the Union, 
while tlie subject was under discussion, and, accordingly, they 
accommodated their theories to their prospects. They can be 
quoted on both sides of their great question. 

Setting aside all mere generalities upon which no pertinent issue 
can be joined, propose some point or points of exception to the 
principle and substance of protection, and, if you could at the same 
time, indicate the corrections that are in free trade, wc might get 
up a case upon its merits. 

I). Well, with leave to amend my charges as the occasions arise, 
I complain, first, that: — A tariff of protection is necessarily class 
legislation, with these specifications: — If it contains a free list, 
and if it varies the rates of import duties upon different articles, 
as it always does, it is une({ual, and, therefore, inecpiitable in the 
burdens imposed. 

T. To the loose general charge of class legislation the objection 
lies that it is indefinite. Copyright and patent-right are protective 
of a class or classes, and prohibitive to all but the beneficiaries. 
So are the laws that assign remunerative duties to official function- 
aries. Executive appointments make a class of public officers, and 
reserve the fees and salaries to persons so selected. All these 
favored and protected persons are monopolists, if an epithet is to 



INTERNATIONAL TRADE. 249 

be preferred to an argument. Have you any objection to these 
monopolies ? 

J). I am not engaged with this sort of analogies. 

T. Then you should not provoke them by indefinite and vague 
epithets in a general charge of inequality. 

D. If your reply can serve any other purpose than a rebuking 
criticism of a phrase, improve it by applying it to the specifications 
which it is plainly meant to cover. 

T. Right. Your rejoinder is direct to the purpose and to the 
point in hand. Equally direct and plump as are the applica- 
tions of the analogies used, I say that if I lend money to one man 
who will use it to give employment to a hundred laborers in work 
that affords a support to them and to their families, I have in 
effect, if not in purpose, conferred the benefit upon the whole 
hundred and one, and their dependents, in proportion to their sev- 
eral abilities to avail themselves of it ; and I have not limited its 
advantages to that one who is thus made a conduit of a general, 
though graduated, supply. I have not made a monopolist. 

D. But suppose that the distributing agent of your bounty is 
one of the class of great manufacturers, and your helpful fund is 
confined to his employes ; and further, suppose that you are per- 
sonating the common government; has not your beneficence the 
limitation and exclusiveness of a favor to a class, and so become 
fairly liable to the charge of partiality and inequality of remedial 
measures, if such charities may be allowed that character ? 

T. You have put me into the hardest position to maintain, by 
likening the favor conferred to the system of bonuses accorded in 
the olden time, or the earlier time, for the encouragement of in- 
dustrial enterprise, — such as that adopted by Colbert, the great 
financial minister of Louis XIV. He gave directly from the im- 
perial treasury two thousand livres ($400) to each loom put to 
work, for the purpose of establishing the textile manufactures of 
France, and to which, by the way, they owe their origin and 
great success then and ever since. The like policy has been, in 
a multitude of instances, followed by the governments of Western 
Europe, and has mainly contributed to the superiority they have 
achieved over their Asiatic rivals. But this policy, however recom- 
mended and justified by its necessity in the circumstances, proved 
17 



250 POLITICAL ECONOMY. 



% 



to be liable to abuse, and was, under the favoritism of ffovern- 
ments, so greatly abused that it has fallen into general reproba- 
tion. It was perverted into monopolies, and class and individual 
favoritism. Such perversion is only a good objection against a 
principle specially liable to it. Nevertheless even in such cases, 
the rule still holds that, " if one member of the body be honored, 
all the other members rejoice with it." 

The policy is still allowed under cover of some sheltering justi- 
fication, such as subsidies in the guise of contracts for carrying 
the mails at sea, or gifts of public lands, and the loan of the na- 
tional credit to railroad corporations for carrying the mails, and 
for military transportation across the deserts and over the Rocky 
[Mountains of the United States. These are in eifect, and indeed 
in intention, bonuses, equivalent to money paid out of the public 
treasury in support of enterprises that are warranted by the im- 
perious necessity for government intervention, — the expenditure 
looking wisely and impartially to the diffusive beneficence of the 
grant. A nation, being in its welfare an unit, is as much inter- 
ested in a fort on its frontier, a man-of-war on the ocean, as in a 
railroad in its centre. The stomach does not engross the food 
which it receives ; the common circulation distributes it in due 
proportion to every member of the integral body. 

These examples, however, are not such instances of the pro- 
tective policy as are directed absolutely, and made securely ope- 
rative, beyond the peradventure or misadventure to which bonuses 
in form are exposed. 

D. I concede the utility of bonuses that are indispensable in 
aid of public improvements and defences otherwise impracticable ; 
but I stand upon my objections to legislative interference in the 
pursuits of private business affairs, through the infliction of the 
burdens and restrictions of the protective system. 

T. I infer that you allow special legislation, favors, and grants, 
not only because their objects are impracticable without such aid 
and exclusiveness of privilege, but because they are required by 
the common interest of the whole people, and are prospectively 
impartial by a ratable distribution of benefits upon the community. 

I). Of course it is the ultimate operation and effect of any 
special grant, whether it is a railroad, a passenger ship, or a 



INTERNATIONAL TRADE. 251 

patentee, or any other contributor to public and common benefit, 
that takes it out of the category of unwarrantable class legislation. 

T. That is all I ask or need upon our main point. But, before 
I apply it to the law of import duties, prohibitions, and embar- 
goes, I must endeavor to settle an intrinsic question, in order to 
prevent its obstructive interference with the progress of the dis- 
cussion which we are engaged with. 

B. We had better have it as an episode than a muddle. What 
is it ? 

T. You will find it in this proposition : Protection is not taxa- 
tion in its spirit, purpose, principle, or, in its operation. 

D. Maintain this proposition and you muzzle your antagonists, 
for their argument is a complaint, rather than a policy, resting 
upon its own merits, although sufficiently strong in that attitude 
to the debate. It is a rebellion against a tyranny, and has its 
justification in its injuries. Free trade antagonizes protective 
duties as burdens, pure and simple, imposed upon consumption. 
If import duties are not truly taxes, they must rest on other 
grounds, and must be judged by their difterence of working prin- 
ciples and objects. So much is fairly conceded to the assumption, 
provided the assumption be supported by fact. 

T. First : Protective charges upon foreign imports avow a 
purpose totally different from taxation. 

Secondly : They have a totally different rule of assessment. 

Thirdly : They have no respect, and bear no relation whatever, 
to the value of their subjects, and in this respect differ world-wide 
from the rule of taxation for the purpose of government revenues, 
and for this reason ad valorem assessments, beside their other 
criminalities, are utterly alien to the protective principle. 

FourtJily : They have no arbitrary or constant rates of assess- 
ment. Being strictly and only remedial in their use, they adapt 
themselves to their own necessities ; and although they afford, or 
may afford, incidental service to the national revenue, this is not 
their design, and they are, therefore, not regulated by the require- 
ments of national income and expenditure. 

In all these points of character and purpose they differ from 
government taxes, which, distinctively, are contributions levied 



252 POLITICAL ECONOMY. 



1 



upon persons and property for the necessary supply of the nation's 
expenses. 

Blackstone, who scarcely ever fails in logical definitions, or 
descriptions of things by their kind and difference from other 
things, and as carefully excludes all that does not belong to them, 
says : " Tax is a rate or sum of money assessed on the person or 
property of a citizen by government for the use of the State, and 
is usually levied upon the property of citizens according to their 
income or the value of their estates." Here we have the nature 
and purpose, and thence the governing rules of taxation. 

The grand difference of protection proper is given by Webster 
as " defence, shelter from evil, preservation from loss, injury, or 
annoyance." 

Protective duties may result in revenue to the government, or 
they may, by prohibitive rates, yield nothing to it. 

D. Imposts upon foreign merchandise are usually commended 
for the revenue which they yield ; and it is claimed for them that, 
in this way, they exempt from burdens personal and real property 
to the amount which tliey yield for the general service. Customs, 
in our country, have been more than nine-tenths of the national 
income. If they are not taxes in character and method of assess- 
ment, they certainly fall upon the consumers of imports exactly 
as internal excises do. 

T. Must I ask you to notice that very different agents, under 
very different laws of object and operation, may have effects in 
some, or most, or all respects, alike. A storm of wind and wave 
destroys a ship ; so does a cannonade. Are they, therefore, iden- 
tical in theory and in operation ? 

Let me try to impress differences, under such resemblances as 
you suggest. Protection aims at, and addresses all its methods 
and measures to the defence of the industries employed in the 
domestic production of commodities, and has notliing to do with 
their market value. It confronts the importer with its purpose to 
secure the interests of domestic capital and labor, by equalizing 
their Oj)j)ortunities against all odds ; and it lays on any amount of 
duty that will do that. As an illustrative example : the Prussian 
Zolverein, in its best and most effective form, was purely protect- 
ive. Originally it charged cotton goods, without any regard to 



INTERNATIONAL TRADE. 253 

quality, thirty-two dollars and twenty-five cents upon every hun- 
dred weight of the fabrics imported. The effect of this specific 
duty was, that coarse shirting paid the equivalent of 90 per cent. 
upon its invoice value or price ; superior shirting paid only 32J 
per cent. ; and fine printed cottons were admitted at 8| per cent, 
(specifics reduced to ad valorem). The Zolverein, or customs 
union, of above thirty German States, intended protection and 
not revenue from foreign trade in the goods which competed with 
their own industries. They intended to foster their own manufac- 
tures in their infancy. Their policy had no regard to the result- 
ing revenue. It did not tax those goods Avhich its capital and 
labor were not yet able to produce. It defended only those of 
which the people were then capable. It put no greater burden 
upon the finest and costliest than something like mere port-charges. 
On the same principle, and guided by the same purpose, it charged 
all kinds of cutlery at a uniform rate by the pound ; letting in 
pen-knives, razors, gold epaulettes, and along with them, china 
wares ; at a merely nominal rate, because they did not then (in 
the year 1818) compete with any home production ; and they laid 
their whole protective stress upon such rivals as hatchets, axes, 
and the coarser metallic wares, which the German people, under 
the shelter of equalizing duties, were able to make for themselves. 
You see there is nothing of the law of taxation in charging a 
razor and a plow-share or a crow-bar at "the same rate of import 
duty per pound. 

I wish that I could make a free-trader understand this. The 
results of the Prussian system took care of its intention. With- 
out any change in its rates, as the people advanced in skill 
and capability, they found the unchanged rates at each successive 
stage sufficiently protective, though constantly declining in ratio 
to values, until, in the end, German cutlery attained such rank in 
quality and price that it obtained a remunerative market at home 
and even in England. 

So Germany, under an unadulterated protective system, grew 
out of its infancy in the manufacturing arts to a maturity which 
has made an empire out of the previously existing fragments of 
nationalities. And, let me add, that every people in Europe 
which has in modern times emerged from helplessness into the 



254 POLITICAL ECONOMY. 



^ 



rank of a power among the nations, has a like history of its ways 
and means of acquiring industrial and political independence. 

J). Is that Prussian system an example of righteousness which 
thus refused to graduate the burdens which it imposed to the abil- 
ity of the consumers, making no distinction between the common 
necessaries of life and the luxuries of the rich, but rather dimin- 
ishing duties in inverse proportion to ability to bear them ? 

T. Be careful of the distinction between internal taxes and 
duties upon foreign imports. Of necessity as well as inequity 
internal taxes are charged upon property in the ratio of assessed 
values ; but imposts having a totally different aim are levied under 
a totally different rule. 

The Zolverein had nothing of the nature of sumptuary laws in 
its provisions. It drew no line of partition between luxuries and 
common necessaries. It did not, by adding to the cost of finery, 
put it still further out of the reach of the poor (for I believe the 
word luxury is applied to all things that are comparatively costly, 
and to no others). Those which are lawful indulgences and refin- 
ing in their use, are not persecuted by the policy that is simply 
and justly protective of domestic industry. That discrimination 
among classes belongs to your " tariff for revenue only," which 
taxes its subjects according to their market value. 

D. You are admitting that custom-house duties have no moral 
ends in view, and have no respect to the ability of taxables. 

T. The proper regulation of imports in foreign trade has its own 
ends to promote, and does not encumber itself with a lien of issues. 
It leaves sanitary laws, police regulations, war and peace, and 
ecclesiastical functions, in the hands appointed to administer them ; 
and it never permits their interference with its economical offices. 
In homely phrase, it minds its own business, and leaves every 
other function of society to the undisturbed performance of its 
special duty. For an example of its avoidance of trespass upon 
any other province than its own, it would never be guilty of putting 
tea and coffee into the aristocratic rank of luxuries by charging, 
say 5 cents import duty on a pound of the one, and 60 cents upon 
the best quality of the other, after the free trade notion of a tariff 
for revenue. In the day of its strength and at the first moment 
of its great victory over tlie unwisdom of that disastrous doctrine, 



INTERNATIONAL TRADE. 255 

our tariff of 1832 put coffee and tea into its free list, and it has 
always followed that rule when disembarrassed of the necessity of 
re2;ardino; revenue in the exigencies of the national necessities. 

D. Are you not claiming a consequence of free trade as a 
property of protection, by citing such instances as have at any 
time been liberated from import duties ? 

T. How slow you are to understand the spirit as well as the 
body of protection, or, how inadequate has been my explanation of 
it ! My dear sir, if import duties were taxes, a free list in its pro- 
visions would be a solecism. Must I so often remind you that it 
is a defence of native industry, and nothing else ? The free ad- 
mission of goods which in no wise displaces home labor, but rather 
promotes its prosperity, is one of its controlling principles. It is, 
therefore, consonant with and obligatory upon it, to guard the 
home market. Thus, where it protects the farmer's products from 
the rivalry of Canada, it exempts from duty all foreign wool 
Avhich is coarser than our climate yields. This, at least, is re- 
quired by its principles and policy. 

D. Please explain this seeming incongruity. 

T. There is a vast quantity and value of blanketing and cheap 
woollen clothing in demand. Our manufactories cannot supply 
these low-priced, but excellent stuffs, from our own wool, which is 
worth from 40 to 60 cents per pound ; but by mixtures with the 
South American wool, costing about 7 cents, they can be made 
and marketed for home consumption. Our own wool never goes 
across the ocean in quantity sufficient to pay for even the playing 
cards which we import. It has, for reasons which I cannot stop 
to explain, no foreign market approaching our capability of pro- 
duction. England admits the low-priced raw materials free of duty, 
and by underselling us, shuts up our production, closes the factories 
depending upon it, and our sheep go to the shambles. This tax 
upon non-competing wools makes mutton cheap, and our own wool 
too cheap to bear cultivation. 

P. It seems to me that the true system of protection thus pre- 
sented is full of scientific harmonies. Its apparent complexities 
are systematically reconcilable. Do you claim for it, as we have 
had it, the merit of giving us the industrial eminence we have 
reached? 



256 POLITICAL ECONOMY, 



1 



D. I should not be surprised if he cLairaed for the darling sys- 
tem, all our triumphs in war and peace, the vast expansion of our 
territory, and income of our population, and many another won- 
drous achievement that certainly has had some other causes of 
success in the growth of national wealth and power. 

T. Then I shall not surprise, however much I may astonish 
you, when I say that the nursing of a nation's infancy, and the 
care of a wise guardianship of its material interests are quite as 
essential to its health and growth as are its constitutional princi- 
ples of political government. We know that no civilized people, 
within the range of authentic history, has risen to independence, 
wealth, and power, that have neglected the protection of their in- 
dustries with a care beyond their common international concerns ; 
and we know that since the inauguration of the chemical and 
mechanical auxiliaries in industrial production, no nation that held 
a high rank, two or three hundred years ago, and has abandoned 
its manufacturing interests to hap-hazard, or to free trade, has 
been able to maintain equality with those to whom it has surren- 
dered the management of its labor and productive capabilities. 

D. Does not the still more modern abandonment of the pro- 
tective policy, in the more advanced countries, show that wealth 
and prosperity, in all their forms, go better unsupported and unin- 
cumbered by the crutches of protection ; in a word, that " time 
has made the ancient rule uncouth," and that " we cannot open 
the future's portal with the past's blood-rusted key"? 

T. I think that only the instrumentalities have been accom- 
modated to the new-time requirements, or that their spirit has been 
transmigrated into more fitting organisms, as their older-time 
specially adapted forms died heroically in the arms of victory. 
Defences are not to be kept armed and equipped when they have 
conquered peace. They must be maintained for their exigent 
uses only. 

It is not becoming in a convalescent to depreciate the splints 
and bandages because they encumbered, while they supported, his 
broken limb through the healing process. They are obsolete now 
to him ; but it is monstrous of him to declare that the bone healed 
itself in spite of the remedial appliances. England, finding pro- 
tection by her present contemporaries an obstacle to her industrial 



INTERNATIONAL TRADE. 257 

and commercial domination of the outside world, apologizes for the 
founders of her prosperity, and calls their wisdom and providence 
a mistake. She made herself the workshop of the world and 
mistress of the seas by impositions and prohibitions, enforced by 
penalties, ruthless and frightful ; but now she endeavors to hold 
the vantage ground so gained by breaking down the like defences 
of the nations against her aggressions, actual and possible. 

D. As against injurious foreign competition your doctrine has 
some force. But in practice it is an unwarrantable interference 
with the private right of self-government, and free selection and 
pursuit of business avocations. It assumes to decide the people's 
industrial destinies without consulting their preferences of taste 
and capability. It, in effect, says to fifty millions of people in the 
United States, " You don't understand your own interests as well, 
and are not as fit to manage your own private business, as a couple 
of hundred congressmen are," 

T. Free trade seems to deal in nothing but abstractions. It 
takes inferences for its data, and does all its reasonings upon the 
postulates of its own manufacture ; like John Stuart Mill's notion 
of political economy, " it is founded upon abstractions, not upon 
facts ;" and, thus having the start of beginning at the outpost, it 
compels the antagonist to run backwards in the race which it 
challenges. 

We had to meet the class legislation cry as one of our side 
issues ; then inequality of taxation as another ; and now we are 
put upon another, by the interjection that protection of the com- 
mon interests of the community must necessarily interfere with 
personal liberty in the choice of industrial pursuits. 

There is a conspicuous fallacy in the assumption that every 
man is so wise that he needs no guardianship, which I do not 
expect you to press upon me. Moreover, it is so impertinent in 
this debate that it has nothing of its intended consequence even if 
it were admitted. It is a shot entirely wide of the mark. 

Protection is so far from tending to limit, confine, or control 
self-government in the choice of business avocations that its only 
aim and intention is to secure the conditions and opportunity of a 
free, wide range of choice, large enough in its provisions for the 
liberty of every taste and capability. It is best described as a 



258 POLITICAL ECONOMY. 



^ 



system of free domestic commerce, in opposition to the free 
foreign trade, which would cripple it. 

I). Would you controvert that battle-cry of freedom, " The 
world is governed too much ;" and its corroboration and exponent, 
" It is astonishing with how little wisdom the world is governed" ? 

T. It is more astonishing that such empty generalities should 
become the fundamental principles of theory concerning practical 
affairs. If I must argue the necessity, from the universality of 
government intervention in private affairs, I could adduce such 
instances as these : Legislation in regard to corporations, banks, 
brokers, auctioneers, canals, railways, artificial roads, mechanics' 
liens, apprenticeships, market inspections, patent rights, copy- 
rights, hours of labor, cruelty to children, licenses, enabling and 
restraining, forms of conveyances of property, coinage, weights 
and measures, insolvency, intestacy, legal tender in payment of 
debts, partnerships, trusts, poor laws, school laws, election laws, 
marriage, sanitary laws, police laws, militia laws, post-offices, 
infancy and maturity of age, damages in compensation for loss of 
life or limb, the law of common carriers, with a long train of other 
interferences in.private business affairs too numerous to detail. In 
all of which the incompetence of individual wisdom or power in- 
vites government regulation and protection, limited only by the 
line where individual capability, convenience, and security mark 
the proper division of the public from the private functions of 
societary life. 

D. I need go no further in reply to such a string of refractory 
instances as you have produced, than that there are exceptions to 
every rule. 

T. Which, if true, forbids the application of the rule to the 
exceptions ; especially when they are more numerous than the 
examples ; for, exceptions instead of supporting the rule directly 
contradict and flatly refuse submission to it. Besides, let me re- 
mind you that the proverb which you quote is only the dodge of a 
manifest untruth, at best. It means " I am right except when I 
am wrong." 

P. Shall we return now to the direct development of the pro- 
tective theory — its vindication from the charge of limiting its in- 
tended benefits to its first-hand beneficiaries — the employers and 



INTERNATIONAL TRADE. 259 

employees, with their immediate dependants, to whom it grants its 
favors ? 

i). If I understand the argument, the escape from the charge 
of monopoly and inequality at the expense and to the injury of all 
outside of the privileged parties, is to be found in the ultimate 
distribution of its favoritism or its advantages, to the whole com- 
munity without partiality. 

T, Nothing less or ■ other than a fair and determinate tendency 
to universality of beneficence can justify any aid given through 
any special channel. It must not even ask the indulgence of that 
invidious maxim — "the greatest good to the greatest number," 
which, by the way, authorizes the oppression of the minority for 
the undue advantages of the majority. 

D. I confess that I did not expect such a downright radicalism 
of doctrine in so bald a system of. conservatism as you propose to 
defend. 

T. A true system of social science, in all its branches, repu- 
diates the poetic heresy of " educing from partial evil, universal 
good," as indignantly as St. Paul denounces " the doing of evil 
that good may come." 

We submit our policy to judgment under requirements so rigid 
as these ; and intending none of the dodges of a compromise 
democracy, we ask no favors from its hermaphrodite philosophy, 
made up of the most malignant elements of prerogative mixed 
with the silliest aphorisms of demagoguery ; which I take to be 
a true analysis of free-trade. There is a generality for you ; for 
I owe you one. 

D. I think that is overmuch to say of a doctrine held and 
avouched by the most advanced minds of the time. 

T. The most advanced ! Say the most protruded, and illustrate 
the simile by the highest heads of the tallest stalks of a grain-field, 
overtopping those which have something in them which imposes an 
attitude more modest. 

D. Poetry, imagery, borrowing all its strength of argument 
from sampler analogies ! 

T. Truth may in its earnestness and fervor rise to the tone of 
verse without any compliment except to the heart of the utterer. 
I have not assailed the motives or the morals of the enemy ; be- 



260 • POLITICAL ECONOMY. 






cause I know that many of them are innocents. I have better^' 
weapons for offence and defence than opprobrious epithets. That 
is the ammunition of the other party. 

D. Do they skirmish with poisoned shot? I was not aware 
of it. 

T. Sturdy beggars, robbers, monopolists, money lords, conspir- 
ators, are among the terms common to the doctrinaires of the 
party ; to which, by way of climax, protectionists are plainly told 
that they are fools, dotards, and bigots, as blind to their own 
interests as they are reckless of the rights of others ; with all 
that is odious in the masterdom of capital, all that is wicked in 
speculation, and cowardly and cruel in riding rough-shod over the 
barefoot crowd in the thoroughfare of life's journey. Have you 
not noticed anything of this ? 

D. Well, yes. In the feebler newspaper editorials, and in 
stump speeches of the incapables ; but can you find one instance 
of the offence among those for whom the discipleship is justly 
responsible ? 

T. One instance, only one ! I take the readiest at hand, and 
the easiest of access. William Chambers, in " a manual prepared 
for the use of schoolmasters, tutors, governesses, and parents," 
entitled, " Historical and Miscellaneous Questions with Answers," 
sums up his catechism for the innocents thus : " In plain lan- 
guage, protection in trade is little better than public robbery." 
Will that do for one instance ? You may have another : the 
grandson of John Quincy Adams ventures boldly upon the same 
charge in the like terras, although his grand ancestor is thereby 
laid open to the accusation ! In fact, the retailers of the creed in 
our own country, generally, without respect to persons or opinions, 
though they be represented by such persons as Washington, Jef- 
ferson, Madison, and Hamilton, use such terms of obloi|uy as 
freely and as unreservedly, as if they were addressing themselves 
to a street mob, " for the greatest good of the greatest number" 
of voters, and as careless of the laws of logic which rule the 
greatest thinkers, and at the same time, gentlemen entitled to 
respect. 

I). Faults in the advocacy of principles in issue ! But the 
question is, in essence, the reserved rights and liberty of the 



INTERNATIONAL TRADE. 261 

people, wliich need definition and defence. These -are the sources 
of public dangei". It is the domination of the persons in power, 
in the administration of the common interests, that is commonly 
in the aggressive. All the reformations of history, in Church and 
State, have been branded as rebellious, simply because they are 
the resistance of the wronged many to the usurpations of the few. 
" Eternal vigilance is the price of freedom ;" and the value of 
liberty, after your notion of the value of commodities, is the cost 
of its production and constant reproduction and maintenance. It 
is the invasion of individual liberty by obstructive interference ; 
it is the watchful and jealous prohibition of executive intrusion 
upon private rights, which has consecrated the maxim, *•' that 
government is best Avhich governs least." 

T. Another generality, tipped with an antithesis, as lightning 
rods are defended from the melting fire which they invite by 
infusible points, — conductors of the clouds they point at. 

But political government has two aspects, each essential to the 
other — control and protection. A social deism and a social provi- 
dence, when, in any worthy sense, it is a human copy of the 
Divine ; that, to the utmost possibility of its power, it may do 
His will on earth as it is done in heaven, " causing its sun to rise 
on the evil and on the good, and sending its rain upon the just and 
on the unjust." The interferences of a rule which respects lib- 
erty, while it provides for and defends its exercise. 

If democracy be not political atheism, it must accept this union 
of supervision and sustentation ; that is, if it be not the pure 
democracy which Jefferson "calls the devil's own government." 

D. Democracy is not lawlessness. It authorizes government ; 
but it insists that it shall be self-government ; that not a part shall 
govern the whole, but that the whole shall govern the parts ; re- 
straining, maintaining, and protecting them equitably, wisely, and 
beneficially. Otherwise it would be only a creed of rebellion, 
and not a policy of civil government. 

T. But it has been generally so busy pulling down Babylon 
that, by force of habit and the impulse of its dogmas, it gives less 
attention to building up Jerusalem. It carries its war-cries into 
the dominion of peace. Its instincts are always prohibitory. 
Ever crying, " Thou shalt not, thou shalt not," to the constituted 



262 POLITICAL ECONOMY. 

authorities, hardly conceding any force to " thou mayest," " thou 
shouhlst." It demands abdication, instead of the performance of 
any duty, except repeal. It requires the administration to cease 
to do evil, but does not insist upon learning to do well. The motto 
which you quote, practically rendered, means, — Do next to noth- 
ing ; and nothing at all, by the same rule, would be still better. 

To meet and avert the mischiefs of this insane individualism, 
let us look at the requirements, as well as at the limitations, which 
the government of a commonwealth imposes upon its functionaries. 
The diversity of cjlpability, taste, talents, aims, and objects of the 
multitude whose fortunes are at stake is so great, so multitudinous 
that, as hardly any two people are in anything alike, so their 
fitting avocations are infinitely diversified. 

Our last census (of 1870) gives a list of 338 occupations of the 
people known by distinctive names. The Superintendent notices 
the obvious deficiency by saying that it is not possible for the 
enumerators to fill two or three thousand subdivisions with appro- 
priate entries ; and he is fully aware that a large number of those 
that are designated include a considerable variety of businesses 
under a single description ; and, to the unlimited conglomeration 
under the titles given, we must add a multitude of others not 
given, for if seven or eight workmen are employed in making a 
pin, and perhaps a thousand in the production of a daily news- 
paper, we may as well say of most of the occupations under a 
single name, mtdtum hi jxirvo, and so give up any attempt at 
estimation. 

D. This proposition does not need amplification. To what does 
it tend ? 

T. It tends to teach and enjoin a commensurate diversification 
of emi)loyments, adequate in adapted variety to the latent pro- 
ductive powers of the whole people. 

P. There it is in a nutshell. But the idea is so vast that the 
specifications which it embraces would help to the better appre- 
hension of it. 

2\ A largely comprehensive assortment of labor requirements 
by one class of the people, dependent on their industries, offers 
itself, importunate for consideration. 

Without a very great variety of productive occupation, one-half 



INTERNATIONAL TRADE. 263 

of the population — our women — must be put into the " supported 
class," or driven into unsuited drudgery. The modern system of 
manufacturing has taken from the household the spinning-wheel, 
the hand-loom, and the knitting-needle, in money-earning service. 

In 1791, Alexander Hamilton, then Secretary of the Treasury, 
officially reported : "A vast scene of household manufactures," 
which, not then being displaced by steam and machinery, as they 
since have been, he says, " supplied in different districts two- 
thirds, three-fourths, and even 'four-fifths of all the clothing of the 
inhabitants." Of textile fabrics he says : " In several kinds the 
domestic fabrication was not only sufficient for the families them- 
selves, but for sale, and to such extent in some cases that they 
were exported to foreign countries." 

This field of self-supporting work, which was in the hands of 
our women a century ago, now that their number has increased 
twelve times, is in that proportion necessary to them, and to the 
country by them, if by any means it may be secured to them. 

P. Hamilton's "vast field of female labor" was cultivated 
under cover of the domestic roof. Is the sex capable of the 
change to the public workshop which your preamble suggests ? 

T. The §.]3liere assigned them by the dandies of propriety, hap- 
pens to be no sphere at all in the profitable system of public ser- 
vice. I would give them at least a hemisphere for their necessary 
revolutions in the industrial system, and leave to themselves to 
take care of the proprieties of their agency. That is their busi- 
ness. It is ours to provide, at least not hinder, their opportu- 
nities. The barbarous chivalry of a former age has, in the reign 
of honest industry and equal rights, rotted out of our own sex, 
and it behooves us, changing with the change, to release the other 
sex from its brutalities, that is, its enslaving and debasing courtesy. 
By the way, do not the tournaments of our very rural gentry 
mock the old-time parades, very much as the mimicry of •' the 
pope of all fools" travestied the glories of another decaying do- 
minion, and in the same way signalize a reformation ? 

D. I wish I had not obtruded an interruption so unnecessary 
to you, and opened on your side a radical wrangle with the con- 
servatism that has hard work to maintain the social peace. 

P. There is fun in a conflagration, for boys and firemen. 



264 POLITICAL ECONOMY. 

General Grant said a good thing when he said "let us have"' 
peace." 

T. I have the boy's justification : " he struck first, besides, I 
run with the engine, and a thick smoke as much as a bright fire 
demands my attention." Laying aside ray fire-proofs, I resume : 

Under the great change in the modern apparatus in production 
of commodities which re(i[uire skill, the effective provision made 
for women appears thus in the census of the year 1850 : — 

The wages of women in factories was five-ninths of those of 
men, in the like employments ; and they numbered 28| of the 
hundred hands employed, or about equal to one-fourth of che male 
operatives. In 1860 the women engaged in textile manufactures 
were 54 per cent., or more than half of the employees. Their 
wages then amounted to 33 1 millions of dollars in the year, and 
their number was 212,383. Twenty years have transpired since, 
and their employments have been greatly increased in number and 
variety. I do not give these statistics as the true measure of 
their contributions to the mass of the country's products, nor as 
the measure of their need of gainful occupations. It may serve 
to indicate their adaptation to the existing methods of the indus- 
tries required by the times ; because it suggests the importance of 
its opportunities to them. 

The factories in which they were engaged Avere, in 1860, such 
as these : Paper-boxes, carpets, clothing, cotton manufacturies, 
hats and caps, hosiery, millinery and dress-making, straw goods, 
umbrellas and parasols, woollen goods, boots and shoes, cigars, 
snuff and tobacco. Besides these occupations, above 200,000 
women were in service in retail merchandising. 

Mark ; all the productive employments mentioned are those of 
commodities in which foreign manufacturers are in active competi- 
tion with us in our home markets. Let down the bars, and these 
women will be driven from this vast field, which they have proved 
themselves capable of occupying, and from all its prospective en- 
largement besides. 

If I was under the political helplessness of womanhood, I 
would entreat my governing guardian to save to my sex the labor 
that is our only independent property in the social partnership ; 
and as I am a man, I own the righteousness of the claim. Tlie 



INTIJRNATIONAL TRADE. 265 

idleness of women is their imbecility and their perdition. It is 
bondage of soul and body — a curse as heavy as intemperance upon 
their brother men, and quite as mean and worthless. In large 
part it is enforced upon them. In the proportion that their social 
status and relations are ameliorated, their personal independence 
and its proper dignities are secured. 

D. Would you grant them the right of suffrage ? 

T. I would grant them nothing, but would put them in the way 
of earning and achieving anything and everything that they can 
by their own proper force acquire. Simple emancipation is not a 
boon, nor in itself a beneficence. Enfranchisement, without the 
conditions which make it available, is only turning its subjects 
loose " to prey on fortune," or become its prey. " Unbind the 
heavy burdens ; let the oppressed go free " of conventional re- 
strictions, to find their place and to qualify themselves for the 
healthy exercise of whatever there is in them. 

P. The rule of reserving and securing to all the opportunity of 
using their liberty of choice and the fitness of means to best ends, 
extends to the claims of all varieties and degrees of capability, 
and must necessarily rule all commerce, foreign and domestic. Is 
not that cosmopolitanism in principle ? 

T. In a cosmopolitan government it would be. But the duties 
and the care of a national government are bounded by the extent 
and limits of its domain — the duty by the power entrusted — just 
as, in the family, the duty is commensurate with the authority 
committed to the executive. A missionary of a gospel of glad 
tidings to all men, who neglects his own household, thins his phi- 
lanthropy by its expansion ; and the nation that devolves its 
proper care of the interests committed to its governance leaves 
the stranger to control them to his own advantage. The principle 
of Laissez faire, in the exchanges of industry, when it says, 
"Do as you please," subjects its disciples to do as anybody else 
pleases. Ask a loafer to pledge himself to sobriety ; he answers : 
" I can take care of. myself; I know what is best for me ; and I 
won't allow anybody else to govern or protect me." After his 
next spree, when he is sick of it, his apology is : "I happened 
to meet Tom, and Dick, and Harry, and you know I couldn't re- 
fuse them. So I took a little too much." 
18 



266 POLITICAL ECONOMY. 

The nation that will not protect itself, will find Tom, Dick and 
Harry take its government into their own hands ; but then, to be 
sure, it has asserted its good fellowship with all the world. The 
consequences are accidental, and accidents will happen in the best 
of families, especially in those that are misgoverned or not gov- 
erned at all, as to the matters in which they are most exposed to 
mischief. 

P. I think that you have not yet disposed of the impeachment 
that is implied in universal philanthropy or cosmopolitanism 
against nationalism in trade, or to the objections urged by free 
trade as it operates upon the- welfare of the nations which adopt 
it, or as its adoption is urged by its partisans upon all countries 
alike. 

T. A universal principle rules international trade, for nothing 
in the course of nature is lawless ; but no particular policy is 
adapted to the diverse conditions of its subjects. 
. Rational and logical protection is patriotic, which is more com- 
pact and effective than a thinly expanded and impracticable com- 
munism, which, for the sake of being everywhere, resides nowhere, 
and in its eifort to do everything, does nothing. A system of 
national protection, well devised and adapted, proposes the benefit 
of the whole world by taking care of its parts ; and is not other- 
wise cosmopolitan than as the prosperity of every particular peo- 
ple is a necessary constituent of the general welfare, and as the 
good of each is reflected upon every other nationality, in the ratio 
of their several aptitudes. This is just as true a directory of the 
relations and influences of the members of any community. Both 
among individual men and nations, a wise philanthropy graduates 
its beneficence in direct rays on the nearest interests, and diffuses 
its force as the sun gives his heat and light collaterally to the 
latitudes which lie more remote from the ecliptic. A cosmopoli- 
tan antedates the millennium, and theoretically lugs the equities 
of a perfect order into an ungoverned disorder of affairs. To 
effect his levelness of dealing with the inequalities which he 
must encounter, he expects the mountains to sink and the valleys 
to rise, so that a wrinkle of gradation or difference shall not ob- 
struct the smooth movement of his policy. In the existing condi- 
tion of things, he must repress the energy of the highest and best 



INTERNATIONAL TRADE. 26T 

to the weakness and incapacity of the lowest ; as drunken Indians 
are said to handicap their fleetest ponies, that the slow-goers may 
be able to make an even race. 

Unfortunately for his aim, his guiding principle, laissez faire, 
allows any and every disproportion of means and power all their 
existing supremacy in the contest, and thus his basis principle of 
equal right is at war with his professed purpose. 

The protective system, on the contrary, addresses itself to the 
conditions which it is concerned with, and to the work within the 
scope of its powers. 

A genius who had just enough practical sense to go indoors 
when it rained, applied for a patent intended to protect cornfields 
from the depredations of squirrels. He had observed that the 
outside rows were most exposed to spoliation. His remedy was to 
have no outside rows — to put them all inside. That fine fellow 
had' a perfect cosmopolitan cornfield in his scheme. By keeping 
all the rows equally near the centre he could give them all an 
even chance and an equal care. 

D. Unwilling to struggle for the last word in a dispute upon 
abstractions, I should like to recall you to a difficulty on your side 
of the question. You are concerned to show how special favor 
to one class of people distributes its benefits ratably upon other 
than their immediate beneficiaries. Your protective policy mainly 
intends the encouragement of manufactures. This is prima facie 
partiality, and demands explanation and justification. 

T. I will give you General Jackson's answer to your question. 
He was not a visionary, a doctrinaire, or a root-and-branch world- 
mender ; moreover, he was one of your party in its better days. 
In his first message to Congress, he avows hiras.elf a protectionist 
and quotes Washington, Jefferson, Madison, and Monroe as his 
exemplars and guarantees. You will respect the authorities in this 
list. In the General's letter, addressed to Dr. Colman, in 1824, 
pending the discussion of the customs tariff of that year, he said 
that if six hundred thousand persons could be withdrawn from 
agriculture, its products would find a good-paying home market, 
by converting its over-crowded producers into consumers, with the 
advantage of improving the gains of the better adjusted number 
of cultivators of the soil, and the profitable employment of that 



268 POLITICAL ECONOMY. 



m 



multitude which are kept idle by the competition of foreign im- 
ports, and thus build up our own skilled industries ; securing, at 
once, supplies in war, and prosperity in peace. 

The protection needed by our manufactures was in his judg- 
ment the only practicable protection to the farming interests. In 
circumstances which always exist, the fostering of one class of 
industrial pursuits must operate to the advantage of every other. 
At the date of this letter, according to the author, "American 
farmers had no market either at home or abroad," and for this 
reason, a sound rectification of supply and demand could only be 
effected by a due diversification of the home industries. It is 
true that a famine in Europe makes an extraordinary demand for 
our provisions, while the occasion holds. But it is a foreign 
market subject to uncontrollable and incalculable contingencies. 
Sometimes in the past, seventy-five per cent, of imported wheat 
into Great Britain is American; sometimes, within a year of this 
demand, our share of the supply has fallen to twelve per cent. 
Can a steady business, depending for its preparation a year in 
anticipation of such uncertainty, bear the fluctuations of demands 
and of prices, to which it is exposed ? Encouraged by the pros- 
pects of this season, it gorges the market of the next, and has all 
the debts, born of flush times, to meet when the hard times come. 
D. This trade has turned the balance of international trade, 
for two or three years, steadily in our favor. 

T. That is the proper fruit of free trade which our British 
cousins are now reaping. To maintain their superiority in manu- 
factures, they have broken down their agriculture and oppressed 
•their labor, and now they are suffering the effects of a dreadfully 
broken balance of productive power. They have not maintained 
a due diversification and healthy inter-dependence of their wealth- 
creating resources. An immense emigration of their people to 
America and Australia has for some time partially abated the mis- 
chiefs of their system ; but now, they are suftering the beginning 
of the end, which must follow their violation of the laws of nature 
and of justice. In the hereafter they must of necessity take 
our surplus of food at such prices as they shall be able to pay, 
.and our farmers will have to choose between burning their corn 
for fuel and exporting it to their otly European customer ; for all 



INTERNATIONAL TRADE. 2(39 

the other nations of the Eastern Continent are not only self-sup- 
plying, but are our rivals in the British market for the sale of 
their surplus. The necessary result is coming. General Grant, 
in 1869, concurs with General Jackson, after a lapse of forty-five 
years of further experience. He says : " The extension of rail- 
roads in Europe and the East is bringing into competition with 
our agricultural products, like products of other countries." And 
justly infers that the home market is the only reliable and perma- 
nent one of our farmers. 

P. I have seen it stated that three-fourths of the people of the 
more advanced nations, industrious and idle, are the customers of 
the manufacturing class, and that one-fourth may be advanta- 
geously employed in what is called the converting industries, to 
distinguish them from the producers of raw materials. Is that a 
fitting division of the industrial functions of a community ? 

T. I cannot answer. It is quite impossible to form an estimate 
from the data at command. The average value of the raw material 
employed in manufacturing establishments, in the year 1860, is 
given at 53^ per cent, of the value of the products ; but the cen- 
sus reports do not nearly embrace all the arts of conversion, and 
their supplies of materials. I guess that it would not be far 
wrong to estimate the respective values of their products at an 
equality. 

In Great Britain (Ireland excluded) the proportion is supposed 
to be three of the class of manufacturers, exchangers, transport- 
ers, and professional people, to one of the agriculturists and other 
producers of raw material. The relative numbers are probably 
between those of Great Britain and the United States. This 
estimate is supported by the fact that England, Scotland, and 
Wales cannot find an answering demand for their manufactures at 
home, but are dependent upon foreign trade for the larger part of 
their artificial products, and, of necessity, are concerned to keep 
the communities with which they must trade, in the ratio of three 
to one as consumers, to balance their three to one of producers. 
Would not a well-balanced equality or relation of the respective 
forces of these two great classes make a better division of their 
mutual interests than to have one of the scales hung in suspense 
by the other in another hemisphere ? 



270 POLITICAL ECONOMY. 

D. You would find protection everywhere — in all trade, and in 
the money medium, as well. 

P. What a cross-reading this idea forces upon the British brag 

" Her march is o'er the mountain wave, 
Her home is on the deep." 

If the mutualities of her home industries were better equipoised, 
she would not need to disturb their balances everywhere else. 
This view of the situation throws an illustrative light upon all the 
past of her commercial history, and upon the future of her for- 
tunes. She is on a see-saw with the nations, the outside barbari- 
ans, and she is up only when they are down. It was best to put 
her portraiture into poetry. Why not call her usurpation of 
everybody's labor, a polytechnic metropolis of trade ? Adam 
Smith, whom she still Avorships, rudely called her " a nation of 
shop-keepers," striving to make herself " the workshop of the 
world." Daniel Webster furnishes her with another euphuism 
— " Her morning drum-beat follows the sun round the globe." 
That is better than to describe her mercantile marine as a host of 
drummers for an island huckster. 

D. Softly, my boy. Don't forget that we have a common 
origin, a common language, and a common destiny. 

P. The partnership is well enough, so far as it is even-handed, 
but I don't like a circular hunt in which I must take the role of 
the hare, and my venerable step-mother personates the hound. 

T. A due balance in the industries of a people, as respects 
others, and the harmony upon which the welfare of every indi- 
vidual depends, is a clear justification of the governmental inter- 
vention by which such ends are to be attained. The ten thousand 
differences of ability, taste, and fitness for the corresponding ten 
thousand varieties of supplies demanded, must be provided for, 
that every man's place may be kept open for him. I need not 
amplify this proposition, but I must ask you to make an effort to 
grasp the vast variety of occupations required to evoke the whole 
wealth of talent, labor, and enterprise latent in such a community 
as ours. Natural laws do not bring the water of the rivers to 
every man's door in permanent and sufficient abundance. It is 
the lawful business and the imperative duty of the communal 



INTEENATIONAL TKADE. 271 

executive to gather the needed supply into convenient reservoirs ; 
to lay the mains and open the pipes that shall keep the hydrants 
copiously supplied, and in a force that shall accommodate every 
household from attic to basement ; to see that the fountain is kept 
flowing full, and then trust the distribution according to every 
need. The common law of gravitation will not hinder the waters, 
heaped up in special places, from finding their level. There may 
be some wantonness of waste in the overflow, but there can be no 
necessary mischievousness in such accidental misappropriation, for 
" they that gather much in the end Avill have nothing over ; and 
he that gathers little has no lack" (Exodus xvi. 15), if the 
fountain be a full one. 

D. If the provision came like manna from heaven, it would be 
surer of an equitable appropriation than when it is supplied from 
the purse of the nation, or by exactions from the people. 

T. We do not make ourselves responsible for a miraculous allot- 
ment of the benefits. We only supply the means. The distribu- 
tion depends upon the parties interested. Protection makes its 
benefits equable, probable, and even certain to all who put them- 
selves within the purview of its provisions. What more can legis- 
lation, or even Providence, do for men as we find them ? 

D. In dogma and in deduction, in dialectics and dispute, you 
seem so well assured that I must put your pet policy to the ex- 
perimentum crusis of its practical results. What does its his- 
tory say for it in experience ; and what, especially, do the va- 
rious forms and long trial among ourselves report of its merits ? 

T, We are most familiar with the story of its operation, and 
most likely to be thorough in our examination of the question in 
English and American experience. 

D. You have given us your anti-British bias in tidbits of allu- 
sion, interspersed, as opportunity served, throughout these con- 
versations, with criticisms, which are subject to some discount for 
prejudice in opposition to it, as well as for enthusiasm for your 
own doctrines. 

T. I am not indifferent to the issues of inquiries which involve 
the interests of society. I am not of the free-and-easy sort of 
wranglers who hold with the old Greek dialecticians, that there is 
no argument so good but an equally good one can be brought 



272 POLITICAL ECONOMY. 



TBffr' 



ao-ainst it. Nor have I that loaferish indifference to facts and 
doctrines that naturally groAvs out of laissez faire, laissez passer. 
Believing that truths are dynamics in the conduct of economic and 
social life, I wait for the verdict of guilty or not guilty, when a 
policy of government is on its trial, with a sentence to follow. It 
is a do-nothing policy that yawns over the tediousness of evidence, 
and listlessly mumbles, " Oh! what is truth ?" Not as a question, 
but as a dodge and an escape from investigation and earnest de- 
cision. I am happy to say that I have prepossessions, and want 
to believe something, and obey it. Help me to hold my hope 
inservient to faith, under the rule of charity. 

I). As you admit me as a helper, I will not be an obstructive, 
but will try, as I may be able, to serve only as a corrective. 

T. Bear with me while I run over the stepping-stones in the 
current course of British protection : — 

England began her system of restriction and prohibition of 
foreign trade in the year 1338, under Edward III. (the British 
Justinian), and she persisted in it systematically and resolutely 
for more than five centuries — till 1846. The statutes of Parlia- 
ment and the ordinances of the Privy Councils, throughout this 
long infancy of her manufactures, would fill a big octavo volume. 

In 1782 the duty levied upon foreign bar-iron was jG2,16.2 
($13.46) per ton. In 1819 it was raised to ^6.10.0 ($31.60). 
In 1626 it was reduced to ^61.10.0 ($7.30). In these 44 years 
her iron, under protection, had attained the mastery over all com- 
petitors, and the duty of $7.30 was retained only for more abun- 
dant caution. The prices of iron the year before this reduction 
(in 1825) were, in France, ^£26.10.0 ; in Belgium and Germany, 
.£16.14.0; in Sweden, £13.13.0; in England, at Cardiff, 
.£10.00.0. Verily, it was quite safe to take off the splints and 
bandages, and discard the crutches when the limb through their 
support had gathered such strength for the race against all con- 
testants for the prize. 

Passing over the period of her savage penalties upon the im- 
portation of woollen fabrics, by forfeitures, imprisonment and 
maiming (for which see Blackstone, 4th volume, title Owling), and 
the sumptuary laws, the crushing restraints upon the industries of 
her colonies, and the navigation laws which closed like a steel-trap 



INTERNATIONAL TEADE. 273 

upon all maritime competition, with " more of horrible and awful, 
which even to name would be unlawful," and all alike intended 
for the defence of her own domestic manufactures, look at her 
customs duties and prohibitions in full force so lately as after our 
Declaration of Independence. In 1787, silks prohibited, woollens 
prohibited ; cotton fabrics charged from 44 to 60 per cent. ; glass 
60 per cent. In 1819, silks still prohibited ; glass 80 per cent. 
Up to the very last days of her established supremacy, she 
charged on silks 25 to 40 per cent. ; on woollens 15 to 20, and on 
cottons 10 to 20 per cent. Until about 1830 she was not safe 
against the rivalry of the continent in the production of these 
goods. 

In general and in particulars this is true of her policy : she 
never repealed a protective duty by act of Parliament until long 
after it had been eflFectually repealed by her acquired success in 
cheapening her products to the extent that she could undersell the 
like goods in the world's market, and so bar them out of her own; 
and she has not to this day given up the defence of her home 
market against the products of other nations — of this more here- 
after. 

D. Protection has an American history of something approach- 
ing a century, which one would think ought to have matured the 
domestic industries quite as much as five centuries of the earlier 
struggle in which England was engaged with India, in the matter 
of cottons, with Persia in the finer woollens, and with France, 
which for the later thirty years of the strife, maintained, accord- 
ing to McCulloch, a steady defence, amounting in effect to absolute 
prohibition of all competing imports. 

T. It is now but 90 years (1790 to 1880) since the Federal 
Union entered upon its system of protection, and that history is 
a strange, eventful, and instructive one. I must be allowed to 
trace it briefly, touching only it| epochal points. 

From the commencement of the French Revolution, say in 
1793, to the year 1815 — 22 years — the wars of western Europe 
gave us some shelter, by suspending hostilities in our industrial 
conflict with the trans- Atlantic world ; but then we were yet in the 
woods ; we had neither the capital, the labor, nor a sufiicient pop- 
ulation to avail ourselves, to any great extent, of the chance af- 



274 POLITICAL ECONOMY. 



1 



forded us. The return of peace in Europe, after the fall of 
Bonaparte, and the liberation of the working people of England, 
France, and Germany, from their occupation in arms, to industrial 
employments, changed the situation. Our tariffs, from that of 
1816, till that of 1824, or indeed till that of 1828, had served 
but inadequatel}' for revenue, and not at all for protection. Dur- 
ing these 12 years, the manufactures of the United States were 
undergoing the process of " strangling in the cradle," avowed by 
Lord Brougham and Joseph Hume ; and, as the spirit of British 
domination was expressed, we " should not be allowed to make so 
much as a hobnail for ourselves." We had lately been the polit- 
ical dependencies of Great Britain, and the purpose of holding us 
in the condition of industrial colonization was openly declared and 
by every possible measure rigidly practised. 

The deduction of these two periods from the reign of the pro- 
tective legislation leaves but 56 years to be accounted for. The 
fully protective tariff of 1828 had a fair run of four years only, 
and a compromised extension of about two ypars more. In that 
time the whole national debt of two wars of ar)ns Avith the mother 
country had been provided for, and actually extinguished ; the 
Treasury was full to over-flowing, and universal prosperity pre- 
vailed among the people. Jeshurun waxed fat, and kicked. The 
party that regarded protective duties as an oppressive tax upon 
consumers, maugre the demonstration of its fallacy, thought it 
was the proper time to kill the goose that laid the golden eggs. 
Charge protection with these six years of its opportunities, that is 
from 1828 to 1834. Then, wholly deprived of its efficiency, we 
had a succession of panics followed by revulsions which lasted till 
1842, carr3nng their mischiefs into the year or two after the re- 
stored policy of defence was provided for redress of the evils of 
an 8 or 9 years rule of free trade. The tariff of 1842 was com- 
pelled by both national, and general private, bankruptcy. The 
Secretary of the Treasury reported to Congress in the year 1841 
that a public loan could not be obtained either at home or abroad, 
and this, but five years after the exchequer had to be relieved of 
its surplus by the distribution of twenty-eight millions among the 
several States of the Union. The sheriff's offices of the country 
now became the clearing houses of private debts. Do you remem- 



INTERNATIONAL TRADE. 275 

ber that General Jackson, whose presidency lasted from 1829 to 
1837, "left his country happy at honje and respected abroad" ? 
that is, the tariff of 1828 did it; and do you remember that Van 
Buren, handicapped by Clay's compromise tariff, was groaned 
out of office, in 1840, by the cry of hard times, in the popular 
belief of Washington's opinion, that distressing scarcity of money 
in a country in time of peace, exempt from a failure of crops and 
from pestilences, is the fault of the political administration ? The 
election of that year brought in a change of policy, as with a 
whirlwind, of which the seed was sown by the Clay compromise 
of 1833. and had developed its ruinous free-trade effects fully in 
the great business revulsion of 1837. 

By the way, it was not the non-committal Van Buren, but the 
compromising Clay, the " father of the American system," that 
this time did the strangling of American manufactures in the 
cradle. Well, the tariff of 1842, for the public and private benefit 
that it did, must needs be modified in 1846, so that it afforded 
only incidental protection, which prepared the way for the amend- 
ment of 1857, intended only for revenue, and which eventually 
failed even of that object, and gave us another turn of the wheel, 
that went on with its grinding until, in 1860, the Southern rebel- 
lion once more forced the restoration of the remedial policy of 
duties protective in their rates, which had twice before retrieved 
the fortunes of the people, and amply supplied the national 
finances. To be liberal, I am willing to add the years from 1842 
to 1856 to the debit side of the account of protection ; from 1828 
to 1836, eight years ; and from 1842 to 1856, fourteen years 
more ; making together twenty-two years of the forty-two unjustly 
chargeable up to 1860. 

In this view of the case, what is the force of the sarcasm in- 
tended in the phrase, " Our iyifant manufactures ?" An infancy 
exempted from repression during the period that it could only 
creep, farmed out afterwards for half a dozen years to nurses that 
had an interest in starving it ; and, after another term of twelve 
or fourteen years, while the stripling was learning to toddle on 
its unpractised little feet, subjected again to the repressing sys- 
tem four years more. "Faith, it must have been a strapping 
lad, — a tall fellow of its hands," that could, in the last twenty 



276 POLITICAL ECONOMY. 

years of its fractured life, grow into the robust strength that it 
has at last attained. If this strong fellow's age were asked he 
might answer, " About twenty-eight, for I have been twelve years 
in hospital and poor-house, and as long a convalescent, which, I 
hope, I shall not be charged with, although I was born fifty-two 
years ago." 

Protection in the United States has not been treated as a 
guardian of the person and estate of the people. It has only 
been called on to extricate the country from the disasters inflicted 
by free trade ; and, like a sick nurse, has been as often discharged 
from service at the earliest hour of the patient's convalescence. 

D. Why, in your summary, stop the story at the beginning of 
the Southern rebellion ? Protection has had a fair field and a clear 
run in the twenty years that have since elapsed. 

T. And has worked wonders in the fulfilment of all its prom- 
ises ; and, as usual, is now again threatened with destruction, as 
a discharge from duty fully and faithfully performed. Like an 
army that has conquered a peace, it is to be disbanded until the 
next insurrection of free trade shall compel its re-enlistment. The 
pernicious notion, that protective duties are taxes, because they 
always perform the like service to the revenue of the nation, sets 
the sciolists of statesmanship at the work of repealing them when 
they have answered that purpose, as if they intended no other! 

D. You have, I believe, some respect for public opinion. May 
not the instability of the system be chargeable to the dissent 
which, for some inherent fault, it does not conquer ? " Experi- 
ence, which is constantly contradicting theory, is the only test of 
truth," says Doctor Johnson. 

T. A hostile interest, with a guilty knowledge of the heresy, 
and a guilty purpose in it, has subsidized its propagandists, and 
acted upon the careless and the ignorant, Avho have had the power 
to effect the frequent suspensions of the iiealthful and rightful rule. 

Do you remember that always before our great Southern rebel- 
lion, a balance in the governing power of the Union lay in the 
region which held its labor as a chattel, and never intended that 
labor for the benefit of the laborer ; that, under its system of the 
industries, its agriculture was exhaustion of the soil ; that, not 
only its fitful prosperity, but its very existence, depended upon 



INTERNATIONAL TRADE. 277 

annexation of fresh territory ; that its economic policy aimed, not 
at fostering the productive power of the nation, but at the cheap- 
ening of all things which they could not make, and the cheapen- 
ing of the men that must make them ? 

These, with a host of idlers and factors of the foreign and in- 
imical interest, were ever actively at work, lying in wait, and 
ready to spring upon the true national policy at its boundary 
point of prosperous fortunes. 

Against such a many-headed throng the system, which is enti- 
tled to be called that of the Productive power of the people, as 
distinguished from that of Mercantile exchange, has ever had to 
contend. It had to wrestle for life with a light-headed, juggling, 
bouncing Jack, that recovers itself by the rebound of the force 
which overturns it. 

D. Then free trade has its strength in its breeches, or if you 
like, in its breeches-pockets. 

T. No ; it has its weight there, but its jumpings are entirely 
due to the relative lightness of its brains and heart. 

D. Persiflage apart. You surprised me some time ago by de- 
claring that England still continues to protect, by customs duties 
upon foreign imports, such of her domestic products as are endan- 
gered by competition in her home market. Her official author- 
ities are constantly proclaiming that she has persistently and 
successfully practised upon the principle of free trade, pure and 
simple, for the last thirty years. In evidence, the " statistical 
abstract" of 1875 has this marginal note appended to the tables 
of their tariff rates then in operation : " The total number of 
articles, and sub-divisions of articles in the English tariff of import 
duties was 53 in May, 1875, as compared with 397 in 1859. and 
1043 in 1840." Does not this sweeping reduction of imposts sus- 
tain the boast they make ? 

T. Let us look at the duty-paying articles retained in the 
schedule covering the 53 articles upon which charges are still ex- 
acted, that we may see what of protection lurks in them : 

First, I quote the captions of the classes charged with import 
duties : " Ordinary import duties." In this list are enumerated 
coffee, cocoa, tea, tobacco, unmanufactured ; and a few other 
articles snatched into the schedule to which they do not belong ; 



278 POLITICAL ECONOMY. 

such as cigars and snuff. On all these, except the last mentioned, 
she collects what may be called internal taxes or excises at the 
custom houses. The charges upon the articles proper to this 
schedule, are not protective, because they do not compete with 
any native product. But, upon wines, in like manner improperly 
put under the class of " ordinary import duties," because their 
duties are in fact and effect, as upon manufactures of tobacco, pro- 
tective of the home industry. Upon the domestic stimulating liquors 
Avliich they confront in the home market, the tariff levies one shil- 
ling, two shillings and six pence, and upwards per gallon, accord- 
ing to the quantity of proof spirits which they contain ; that is 
12, 30, and 36 cents per gallon, according to strength, upon wines 
costing in France and Germany, an average of $1.97, which is 
about 20 per cent, of defence of their invoice value against them. 

Upon tobacco manufactures the charge is the difference be- 
tween 44 cents on the pound of the unmanufactured, and 60 cents 
upon cigars, and 54 cents upon snuff. The surcharge being 
plainly a protection of the labor employed in the manufacture. 

The second schedule is headed " Import duties to countervail 
excise duty upon British malt." Under this head beer and ale 
are charged, according to strength, from 8 shillings ($1.92) up to 
16 shillings ($3.84) per barrel ; and upon malt, $2.88 upon the 
quarter, or two bushels ; on vinegar, 6 cents per gallon. 

The third schedule of this/ree trade tariff list, headed "Import 
duties to countervail excise duty upon British spirits " — item, 
brandy and unenumerated spirits, cologne water, and perfumed 
spirits, $2.53 to $3.84 per proof gallon, with a round dozen of 
other articles which contain spirits, and which, if admitted free of 
duty, would badly countervail the domestic products of the same 
things and uses. 

There is a fourth class of dutiable articles in this total list of 
53, which stands boldly out, without excuse, as utterly exception- 
able to the countervailings of this/Ve^; trade tariff. Among them 
is plate gold, charged $4.08 per ounce, and plate silver, $0.36 
per ounce ; the bullion, or raw material, being free. Upon the 
fairest estimate that I have been able to make from the inexact 
data at command, upon these articles, England protects her own 
manufactures, by duties upon imports amounting to fifty millions of 



INTERNATIONAL TRADE. 279 

dollars per annum, standing as a barrier against the importation 
of the quantity produced at home. She does not collect this sum 
at her ports, but she protects her own industries to this amount of 
their market value. Free trade is thus shown to be impracticable 
in fact, as it is a mere pretence in the theory of the country most 
able to adopt it. 

P, You throw an emphasis on the word countervail. What is 
the significance you intend by putting it into elocutionary italics 
or small capitals ? 

T. To mark it with an emphasis. Countervail is a good word 
— an excellent good word. In ordinary honest use, it means to 
balance, to compensate, to defend, or even to protect ; and I want 
to use it for the word protect, for it means exactly the same thing; 
but, as Mr. Weller would say, " it is a more tenderer word." 
There is a seductive delicacy in calling these duties, levied ex- 
pressly as defences of domestic industry, countervailing, or equal- 
izing duties. But as the principle and- purpose with which they 
are imposed is exactly the same as that which we bluntly and 
heedlessly call protective, I want to borrow the service of this 
happy euphemism. John Bull adopts the principle and continues 
the practice of protection, as far as of necessity he must, because 
the inland taxes or excises, which he cannot spare, raise the 
prices of his home products. And, may not Brother Jonathan 
lay such equalizing duties upon foreign imports as shall counter- 
vail his higher wages of labor, higher interest upon the capital 
employed, and his heavy inland taxes, which his old friend 
doubled upon him, by affording aid and comfort to the Southern 
confederacy ? Plainly, Brother Jonathan must ; but let him 
eschew protecting, and insist upon equalizing and countervailing 
his inequality of conditions. His rose will have a pleasanter 
fragrance under a like change of name. 

D. This public document, like Falstaff, is not only witty in itself 
but a cause why wit is sometimes in other people ; and you have 
been audaciously poking fun at the paper which you have called 
the " Statistical Abstract" of 1875. Pray, what is its authority? 

T. The document is entitled " Statistical Abstract for the 
United Kingdom, presented to both Houses of Parliament by com- 
mand of Her Majesty, and printed by the printers to the Queen's 



280 POLITICAL ECONOMY. 

most excellent Majesty, for her Majesty's Stationery Office, 1875." 
In it you may find the tariff tables that I have quoted at the 15th 
page of this majestic document. 

D. Has not England, in the fullest faith in her free trade 
doctrine, released some, imports from countervailing or protective 
duties that do dispute the home market with her own products ? 

T. In the pride of an assured or assumed superiority she has 
opened some of her fabrics to a dangerous rivalry, and she is at 
her wit's end to resist the intrusives. Some time ago the news- 
papers were loud in complaint that French engines Avere being 
employed in their mines, and there is a general complaint against 
the German and American edge tools that are infesting their 
markets. Indeed, the manufacturers are beginning to argue the 
question of protection over again, just as if it had not been settled 
forever by the " advanced intelligence of the age." At the last 
session of Parliament, to encounter a bounty granted upon the ex- 
port of refined sugar by Belgium and France, a Committee of the 
House of Commons thinks that a countervailing duty must be 
imposed for the protection of the British sugar industries, that is, 
its sugar refineries. The London Times is, of course, horrified at 
the proposition to restore the doctrine or policy of protection under 
any dodge in the name given to it. The Times says : " The 
disgrace of a Committee of the House of Commons recording 
anti-free-trade opinion thirty-four years after the successful adop- 
tion of free trade principles has actually been inflicted." 

D. Still the facts of history ought to be allowed their proper 
force in the trial of theory. For an instance : — 

France for thirty, and in effect for full sixty years, maintained 
protection and prohibition in the fullest force, yet, she yielded to 
the demonstrations of British experience, and relaxed her old time 
restrictions upon foreign trade in the Cobden treaty of 18G0 ; 
which has been followed by a great increase in her commerce. 
This, certainly, looks like an advantage gained by her approxiriia- 
tion to free trade in the provisions of the treaty, as the matter has 
been understood by the Lords Commissioners of trade in England. 

T. Stop a little. The provisions of that treaty abolished effete 
restrictions, which were inoffensive, because they were really in- 
operative ; but the bargain between the high contracting parties 



INTERNATIONAL TRADE. 281 

left France an average defence of 25 to 30 per cent, for such of 
her industries as were endangered by free trade with England. 
NoAV, this rate of protective duties is more effective than any that 
we ever had, the relative exposure of the respective conditions 
being fairly estimated. 

The United States have, for obvious reasons, usually required 
two or three times the rates of protective duties that would fully 
suffice for France. 

Messrs. Cobden and Bright did the best they could by that com- 
mercial treaty ; and they, and the Lords of the British Board of 
Trade, were bound to boast of the success that would serve for 
indoctrination of outside barbarians ; who, by the way, need a 
great deal of schooling to enlist them in the discipleship. 

Louis Napoleon was not overreached in the arrangement of that 
treaty. The protective duties reserved to France are, in fact, a 
model for the application of the principle of national defence in 
the items, according to the varied necessities which it embraces. 
For examples of adaptation: — The French charge upon heavy 
wrought iron is $17.58 per ton; on small wrought iron tubes, 
$18.85. The other forms of the metal are as well and carefully 
adjusted to England's superiority in that form of production ; 
although I have heard of complaints by the French manufacturers 
that Eagland, being able to make iron out of almost anything, was 
for a time underselling them. Silk tissues, hosiery, and lace were 
made free, because they can protect themselves. On refined sugar 
3|- cents per pound, a heavy rate, in defence of their own beet- 
root sugar. On plated ware $195.45 per ton ; and on cut-glass 
something less than 4 cents per pound — French skill in these 
goods being almost safe from the highest and cheapest art of 
England. 

In general, from the highest to the lowest rates of duty provided 
for French protection, the faculty and ability of France in an even- 
handed contest with her rival, are reflected as in a mirror by the 
provisions of this celebrated treaty. One can learn from it, by the 
graduation of its impost rates, just what France can do for herself 
in a commercial struggle with her island enemy for the preserva- 
tion of her own productive industries and arts. 

D. Facts are stubborn things, and figures have the multiplica- 
19 



282 POLITICAL ECONOMY. 

tion table for their endorsement. Two and two certainly make four ; 
and is it not just as clear that import duties must add their amount 
to the cost of the articles on which they are charged ; and by their 
reflected eftect, as well as by the intention of their imposition, 
raise the price of the domestic article just as much ? 

T. I will give you some facts and figures, bearing upon your 
question, to digest. In the year 1845 the duty upon imported 
pig lead was three cents per pound. The same sort of lead was 
selling'in the New York market at three and a quarter cents per 
pound. The Secretary of the Treasury of that day (R, J. 
Walker), arguing for the free trade tariff of 1846, had no diffi- 
culty in showing by figures arithmetical that this duty was almost 
one hundred per cent, ad valorem of the selling price. In his 
remedial tarift' he reduced the duty to twenty per cent., and lead 
went up to four and one-eighth cents before the year went round ! 
Now, according to your ciphering, it should have fallen to two and 
a quarter cents, but it went up to nearly twice that figure. Who 
paid the enormous duty of 100 per cent, in 1845 ? And who paid 
the increased price of nearly 100 per cent, under the tarifi" of 
1846 ? 

Can you tell me why foreign producers are so busy and anxious 
to reduce, and, if possible, remove the duties upon their exports 
in our market ? Have they any other motive of interest than the 
clear perception that they pay the duty, or lose its amount in 
profit, or wages, or capital ? The producer bears all the expense 
of fabricating his commodity, and, after that, all the expenses of 
transportation and other charges upon it before it is fairly in the 
foreign market. If a yard of cloth costs the producer at home but 
three dollars, and the foreign government takes one dollar in the form 
of an import duty, it costs the producer four dollars to produce 
it in the market to which it is consi";ned. If it brino-s but four 
dollars there, the importer has no profit ; and if but three, the duty 
is crowded back upon the wages and capital of the producer, and 
he must bear the loss. If it brings five or six dollars per yard, 
still the one dollar duty is so much in reduction of his profit ; and 
so, in effect, the duty is paid by the producer. 

D. Siirely taxes are paid by the man that pays them ; they 
come out of his own pocket, and are a reduction of his income. 



INTEENATIONAL TRADE. 283 

T. Yes, taxes are so ; but protective duties are not taxes upon 
the consumer. Get that kink out of your brain. Quit ciphering, 
and think a little. 

I). Why cannot the importer sell his goods for as much more 
than their prime cost to him as the duty adds ? 

T. Now you are on the track. Suppose that the native manu- 
facturer can produce the cloth at four dollars per yard, the 
foreigner thus is bluiFed, and cannot command more ; and then, 
you see, the importer must pay the duty ; that is, lose it in the 
price of his goods. 

B. But it costs the consumer that one dollar the more ; and, 
while it abates the foreigner's profit that much, it does not at all 
reduce the cost to the consumer ; and so, in effect, he bears the 
enhancement of the price, though the foreigner loses it. Both are 
losers, although the one is compensated by the other's loss. 

T. There is one barrier to the producer's profit here interposed 
to his prices, — the competition of the native manufacturer. If it 
were tea or coffee that the importer had to sell, the whole duty 
falls upon the consumer, for he has no defence against him ; but, 
in respect to things which the native industry, under protection, 
can produce, the case is changed ; and that is the reason why 
manufactures, of which the country is naturally capable, but only 
accidentally incapable, should be fostered. 

If that yard of cloth, like tea and coffee, could not be met by 
a competitive product, its price would be wholly at the command 
of the importer, and he could put it up to five or six dollars, as 
his prospect of sale might determine him ; and, as against any 
charge of import duties for the time, and consequent increase of 
cost, the security against any further advance is provided by the 
home competition through the duty imposed. Did you ever think 
of that ? 

If the foreigner could throw the burden of whatever price that his 
monopoly of the home market would allow him, he could transfer 
to the consumer that one dollar duty upon his goods. Protective 
duties, if they do no more, at least hold the prices of foreign 
goods to a fixed maximum. I have known opium to go up to 150 
dollars per pound, simply because we could produce none, and an 
embargo on the foreign importation prevented a supply. There is 



284 POLITICAL ECONOMY. 

something in industrial independence, where it is possible, worth 
the cost of its defence. Blankets cost us, in the year 1813, twelve 
dollars, Avhich now we can have for three or four. Some of the 
burdens upon trade are prospective benefits, which compensate 
immediate losses in good time to reconcile us to a temporary 
enhancement of current cost. 

But, if import duties do not fall in some fashion and degree upon 
the importer, Avhy is England so industrious in pushing her free 
trade theories and commercial treaties, looking that way, upon the 
nations of the Eastern Continent ? And why so lavish in expen- 
diture with the same object among us, who are her greatest and 
best customers ? No two free traders could pretend to each other 
that it is merely philanthropic, without laughing in each other's 
faces. 

D. But you must admit that import duties, levied for the pur- 
pose of protection, must increase the market price of imported 
articles, because they are imposed for that very purpose, and 
that if the consumer buys them he refunds the duty to the im- 
porter. 

T. Yes ; if the consumer is fool enough, or feeble enough, to 
leave the field to the importers. Give him the monopoly of the 
market and he will indemnify himself, for he is at liberty to do so. 

D. Do you venture to say that the producer pays the duty ? 

T. No. I say that when, and in whatever instance, there is no 
domestic competition, the consumer pays the whole duty, just as 
the citizen pays his internal taxes out of his own resources. And 
I say that the foreign producer pays so much, or the whole of the 
duty imposed, as home competition compels. It is the respective 
conditions of the country's industrial capability that settle the 
question. Another question must first be settled. What deter- 
mines the market price of the article so charged ? In fur- 
ther support of the doctrine that the producer sometimes pays 
the import duties, I adduce the case of drawbacks. What means 
the practice of drawbacks equal to the internal taxes charged upon 
manufactures, when they are exported ? Nothing else than that 
the exporter cannot enter the foreign market if he be not relieved 
of the domestic duty, or excise, which is only another Avay of say- 
ing that the exporter must, in such cases, bear or pay the duty. 



INTERNATIONAL TRADE. 285 

Countervailing taxes or excises have the same meaning. They 
throw the charge upon the producer, not upon the consumer, that 
is, upon the foreign producer, in relief of the domestic producer. 
When England charges foreign spirits $2.53 per gallon in her 
ports, is she not clearly declaring that the producer must bear the 
duty which she imposes ? It is so much burden and barrier upon 
the foreign importer, and he must meet it in abatement of his 
profit in her market. Absolute prohibition is only so much more 
of the same thing ; and, surely, that all falls upon the foreigner, 
or, in the meaning of this argument, the producer. 

Z>. But it seems to me that with all this shifting of the burden 
the consumer does not escape it, nor is he compensated by it. 

T. Let me explain. All loss by protective duties is in values 
exclusively ; while the country gains productive potver, by which 
it is enabled to gain a greater mass of values ; or the loss of 
values is the price of industrial training, to be afterwards compen- 
sated to the purchasers by even a more than equivalent reduction 
of prices ; and presently, by the distribution of benefits through- 
out the community, and to the particular purchaser, if he be 
engaged in business, by the reactive effects of such common pros- 
perity. 

The present compensation for enhanced prices is in the imme- 
diate result that the agriculture of the country gains by increased 
consumption of its products, increased rent and exchange-value 
of real estate ; and manufactured products, under the competition 
thus stimulated, fall immediately in relative price. This gain is 
ten to one greater than the loss by duty prices. Moreover, pro- 
tection is not monopoly, because it is open to home competition. 
It is domestic free trade. It is patriotic. Besides, it attracts the 
skill and capital of other countries, and always increases interna- 
tional trade in those materials which it must import, and by those 
it becomes thus able to export. 

D. A little leaning, I perceive, in this outlook of advantages 
to cosmopolitanism, as well as a close devotion to nationalism, and 
exclusiveness. Permit me to congratulate you. 

T. I am glad that you are beginning to understand me. Phy- 
siologists speak of functions of the body which have the care of 
the individual, and of others which relate men to the society 



286 POLITICAL ECONOMY. 

around them and to the external world. They even recognize 
powers and prospects that are concerned alike with the present 
and the future ; and while they give the individual the first con- 
sideration, they thereby, so far from excluding, see provision for 
the more and more remote interests in the order of their relation 
to the central interests of the individual life. A system of 
economy legitimately national must have its policy as well ad- 
justed to the great family of nations as to its own. But it is 
most nearly concerned with the interests which it best understands, 
and which are within its special control. 

Understand, that protection intends the fostering of manufac- 
tures only in circumstances which render them practicable and 
expedient. Observe that manufactures involve so many branches 
of science and art, and such abundance and variety of laborers, 
and so much acquired skill, that all attempts to force them by 
protection or prohibition, prematurely, is injurious. Expediency 
is its governing law. Capability and fitting conditions are pre- 
supposed. The adoption of protection must be adjusted to, and be 
ruled by, the state of the country. Low duties, but sufficient, 
and these upon the most practicable subjects, first ; and afterwards 
rising and spreading with the rising and enlarging ability. Duties 
(for protection) must not be prohibitory, for this argues incapa- 
city for the endeavor, and suppresses emulation of the domestic 
with the foreign manufacture. 

Please understand protection to mean only the nursing care 
that immaturity requires, and so reconcile yourself to the guar- 
dianship of a nation over its own infancy. A time comes to those 
so guarded and governed, when nationalism and cosmopolitanism 
meet, for as I have said protection is the route toward free for- 
eign trade. It secures freedom at home that it may be able to 
command it abroad. 

D. You concluded our last conversation as if you felt that you 
were done with its subject. But be patient with me, for what is 
bred in the bone comes very slowly out of the flesh. Notwith- 
standing the felt force of your doctrinal principles, it seems to me 
unquestionable that an import duty imposed upon a foreign article 
must reflect an increase of price upon the domestic intended to be 



INTERNATIONAL TRADE. 287 

protected thereby in the home market — I cannot see how this re- 
sult can be escaped. 

I have been reading the Official Report of the Special Commis- 
sioner of the Revenue made to Congress in December, 1869. He 
says, in so many words, that a reduction of the duty upon any 
foreign goods would necessarily be followed by a corresponding 
reduction in the price of the domestic article of the same kind. 
In exemplification — the effect of a remission of $750,000 duty upon 
foreign pig iron in the fiscal year 1867-8, would be a relief to the 
consumers of the domestic article of no less than $10,800,000, by 
the resulting reduction of its market price. The like reduction 
upon domestic salt, of $600,000 duty upon the imported, would 
result to the consumers quite $3,900,000 per annum. On four 
classes of imports charged with heavy duties he estimates the re- 
duction of prices that Avould follow their free admission at no less 
than $48,700,000 to the consumers of the home product, resulting 
from the reflected effect of $6,112,000 duties released upon the 
competing foreign articles. 

Now, if there is truth in arithmetic, an aggregate of 6 millions 
of duties upon foreign goods levied for the purpose of raising prices 
upon domestic productions, and having that intended effect, must 
be a tax of 48 millions upon the consumers ; if eight times the 
quantity of the domestic are thus brought up to confront the 
quantity imported, I verily believe that 8 times 6 make 48. 

T. Clear as mud ! For explication and exposition, too, let us 
borrow the Special Commissioner's slate and his arithmetic. The 
official value of all the foreign goods charged with import duties 
which met the competition of American products in our market in 
the year chosen for his demonstration, was $178,000,000. The 
average of the duties was a small fraction less than 48 per cent. 
The product of American manufacturers for the year 1859 was, 
by the census of 1860, given at 1885 millions. I estimate the 
increase upon this amount in 1867-8 at 85 percent. It was much 
more, I doubt not, but certainly so much. This would bring our 
manufactured products in first hands up to 3487 millions. Noav 
if this mass of prime values was increased 48 per cent, by the re- 
flected effect of the protective duties imposed upon their foreign 
rivals in our market, they must have been thereby surcharged to 



288 POLITICAL ECONOMY. 

home consumers the enormous amount of $673,760,000— nearly 
nine and a half times the amount of the revenue secured to the 
Treasury by the protective duties of the year — at the cost of 1759 
millions to the consumers of the domestic and foreign goods to- 
gether ; or making their market price about one-half more than 
their prime value, that is, the cost of their production under free 
trade. 

This is at once frightful, atrocious, horrible, and Ridiculous ! 

D. How so ? 

T. If this economic logic, backed by its immeasurable arithmetic, 
were practically true, the consequence would be that the smaller 
the proportion of duty-paying imports to the domestic supply the 
heavier would be the tax upon them. Thus, if our own product 
of a given article equals our import, say, to the value of 10 mil- 
lions each, and the duty is 25 per cent., the increased price upon 
the domestic article would be 2| millions. If the domestic product 
be 100 millions and the import duty only 10 millions, the duty 
reflected in increase of price at 25 per cent, upon the domestic 
would mount up to 25 millions. The arithmetical or free trade 
consequence is that we must not, for the sake of the consumer, lay 
any duty at all upon foreign products which compete with our own, 
but should collect all our customs revenue exclusively from such 
articles as we do not or cannot produce. 

Is this cosmopolitanism or free international trade ? Or is it a 
" Chinese wall " built to dike out that mutual interchange of sup- 
plies which is providentially intended to make the whole world 
kin ? 

J). Let me see : — If import duties have the effect of increasing 
the prices to consumers, we should not impose them upon the pro- 
ducts of which we are capable, because they multiply in proportion 
to our capability of production — that seems true. And, if so, all 
import duties must be merely taxes upon consumption. This is 
more than I bargained for. The multitude are the consumers, 
and a tax upon them is not according to ability to bear it. Assess- 
ments according to values of property are fair, but taxes on con- 
sumption fall heavily upon necessaries ; they ought to fall only 
upon enjoyments, or the advantages which government secures to 



INTERNATIONAL' TRADE. 289 

their possessors, for property is only that Avhich the public law 
declares to be such, and which it defends. I am embarrassed. 
Look here, Mr. Teacher, if values in consumption are not the rule 
of taxation, how comes it that ad valorems figure so largely in 
tariff lists ? 

T. They are aliens to the principle of protective duties. Some 
articles, which cannot be described by weight, number, or other 
enumeration, must be so estimated and assessed ; but no purely 
protective system regards the values of its subjects. It is not tax- 
ation in spirit or purpose, and obeys none of its rules. 

The tariff of 1846 was discriminative and protective in its 
promise, but was vitiated in its details by the substitution of ad 
valorem for specific duties ; and in this it disappointed the trust 
which it invited. Sound protective tariffs utterly repudiate ad 
valorem duties, wherever they are avoidable, for their inherent 
frauds and infidelity to their object, even where they are honest. 
An ad valorem rate is in conspiracy with undervaluations to cheat 
the revenue, and disappoint the hope of protection. In their 
capriciousness of operation they are always highest when they are 
not wanted, and always lowest in yield and use when most 
wanted. All experience repudiates them, wherever they can be 
avoided. England imposes duties upon artificial flowers by the 
cubic foot, specifically, to avoid the fraud of undervaluation, and 
the continental nations generally impose duties by the pound upon 
cutlery for the sanie reason, which, by the way, compels the better 
and best articles of import, for they better bear the impost. If 
a fine razor pays no more than a poor one, it is preferred by the 
importer, and the market is so much the better supplied. Ad 
valorems are the crimes and cheats of import duties. 

D. By the way, what is the theoretic objection to throwing 
taxation upon consumption ? Is it not like rent and interest upon 
property and income ? Ought not every man pay for what be 
uses, and pay the government for the care that secures him in 
enjoyment in proportion to his use ? 

T. You are now opening up for consideration the principles of 
taxation, — a question too large for our limits. I must content or 
limit myself to taxation, as a policy or expediency, which, I think, 
will meet the drift of your question in its present pertinency. 



290 POLITICAL ECOXOMY. 

Assessment according to consumption would be neither equitable 
nor practicable. Indeed, neither income nor property value can 
be made a basis of rates. Neither theory nor experience have 
found a philosophic system of taxation. In practice the rule, that 
the exaction must be according to ability and availability, over- 
rides all other general principles. The possible bounds the prac- 
tical ; and, even if humanity and the common welfare were out of 
the (juestion, a ratio or percentage, upon consumption would still 
be impracticable, which is another reason why imposts for revenue, 
governed by the rules and rates of taxation, are inadmissible, un- 
merciful, and undemocratic in principle, for it would raise, perhaps, 
nine-tenths of the public charges from the class or classes that have 
not more than one-tenth of the ability to pay them. Oh, no ! those 
who live from hand to mouth must not be taxed on their tea and 
coffee in proportion to their numbers, or as thousands to one of 
the wealthier classes. On the contrary. Protection has in it that 
sort of class legislation which kindly considers and tenderly dis- 
criminates among its impositions, fitting the burden to the back. 

A tax upon consumption, like a capitation tax, in the present 
order or disorder of civilization, working like an automaton, would 
be insensible to conditions, and, respecting numbers only, would 
ruthlessly excise all ages and capabilities of men, Avomen, and 
children, counting the millionaire and the chambermaid, each alike, 
and respectively one, under the levelling ratio of its exactions. 

You must see that all men are not equal before all the laws 
which affect them. And let me ask you to notice that those 
apothegms, or abstract logical propositions, on which free trade so 
confidently builds itself, must in practice be applied with a differ- 
ence, as Ophelia, like the fates, distributed her rue. 

P. We have never, since the organization of the Federal gov- 
ernment, had what our English friends would call a free trade 
tariff. The nearest approaches to it have been " tariffs for rev- 
enue 07?///," and " tariffs for revenue, with incidental protection." 
Their riding principles, a good deal mixed with policy, and cross- 
cut with necessity, are uncontrollable by any principle. How 
have they worked and resulted ? 

T. Uniformly in failure, gross, palpable, disastrous failure ; 
failure in the very matter of revenue, to which they were specially 



INTEKNATIONAL TRADE. 291 

directed ; and disaster to the national credit, through their ruinous 
effect upon the business of the commnnity, — personally and di- 
rectly by checking domestic industry, — so that the people could 
neither buy the promised cheaper imports, nor meet the usual 
domestic taxation. A tariff for revenue by its very terms is a 
tax transferred from the household to the custom-house. A tariff 
'for protection, on the contrary, says explicitly, tax the foreign 
product, and set the domestic labor and capital free to meet their 
proper share of the exigencies of the national treasury. It says 
to the people : I give you full employment, in the assurance that 
you Avill be able to buy largely of foreign products, and to con- 
sume liberally of our native products. I make your wages and 
profits at once adequate to supply the exchequer, and your own 
necessities and enjoyments. 

That our protective tariffs have not been in any degree pro- 
hibitive of foreign trade is overabundantly proved by the history 
of the customs duties always greatly enhanced by them. They 
have time and again always, without an exception, refuted the 
theory of their opponents. 

D. This doctrine, or this inference from experience quoted, would 
seem to me a paradox. Surely burdens upon imports must be re- 
strictive of foreign trade, but you affirm that they are, curiously 
enough, promotive of the very international exchanges agamst 
which they are levelled. How is this ? 

T. Why, my dear sir, purchasing and paying are reciprocals. 
Consumption does not depend upon supply, but supply depends 
upon consumption. A merchant's goods rot and rust in his ware- 
house when he has no customers, and he can have no customers 
but those who are able to pay. Prices have no arbitrary effect ; 
they are relative to the means of purchasing. On the wages of a 
dollar a day I am as able to purchase as on half a dollar a day at 
half prices, and if I am in enforced idleness I can purchase noth- 
ing. A growing boy will face the winds that would wither a con- 
sumptive. Economic problems are not worked by the single rule 
of three, of which the factors are abstract statistical figures. They 
come under a double rule of proportion, in which the means on one 
side govern the measures on the other. How silly it is to say that 
if the money price of an article be increased, it is thereby put so 



292 POLITICAL ECONOxMY. 

much further out of reach. If the means of attainment are at the 
same time equally or more greatly increased, the cost being fixed, 
what becomes of your ciphered destitution ? 

P. We were amused by Abraham Lincoln's homely sayino- 
that it is easier to pay a good deal if you have still more, than a 
little if you have less. In that truism I think he anticipated and 
at the same time clinched your theory of prices. 

D. The subject is broader, I perceive, than abstractions embrace. 
And this is the reason, perhaps, that confidence is found to be too 
hastily given to aphorisms and apothegms, which at first blush 
appear to stand self-proved, and do not need cross-examination. 
Give me time to reflect, or if you can, accommodate me with the 
points made in this debate. 

T. It would be as tedious as unnecessary to give you the in- 
stances either in particulars or in categories, which prove that pro- 
tective duties levied in the strictness of the principle, always secure 
the consumer from arbitrary prices by preventing monopolies in 
trade— that they always in good time reduce prices to the level of 
the general rewards of labor and capital — that they throw their 
burden upon the importer in the ratio of their efficiency, when 
judiciously adjusted to the capabilities of the country— that they 
always repay an hundredfold any temporary increase of prices by 
putting every variety of capability to profitable employment— 
that they increase the wages of labor and the profits of capital 
more than commensurately, immediately, to all consumers who are 
partners in the business of the time, and raise to more than equiv- 
alence, the exchange value and the rents of property in relief of 
the cost of sustenance, and whatever of taxation may fall upon the 
owners. 

Only annuitants, office-holders upon fixed salaries, and idlers, 
living upon past accumulations, can possibly be burdened by their 
operation ; which is justified by the necessity that the live world 
must not be arrested in its progress for the accommodation of its 
sleeping partners. 

P. I have just now seen a report of the Chief of the Bureau of 
Statistics, giving our foreign trade from 18C1 to 1880. It seems 
to me conclusive against the charge that protection is restrictive 
of international trade. In the first fiscal year, 1861, which ended 



INTERNATIONAL TRADE. 293 

on the 30th of June of that year, we were still under the nearly 
free trade tariflf of 1857. The net import of foreign merchandise 
of that year, in gold values, was $274,656,325. In 1880, under 
protective duties, they were $656,198,440, almost two and a half 
(2.39) times more. That for the buying — now for the selling. 
In the year 1861 we exported of domestic products $204,899,616, 
and in 1880 $824,106,790, something above four times (4.02) 
more than in 1861. Further, remark, that under the nearest pos- 
sible approach to free trade the buying was 25 per cent, greater 
than the selling ; and in 1880 the selling was '^Ij-q per cent, more 
than the buying ; and, in the aggregate, the total foreign trade of 
1861 was but $479,555,941, but the total of 1880 was $1,480,305,- 
239. Thus the total foreign trade had increased above three times 
(3.08) under the protective. Over the free trade tariff", which had 
its full sweep before the beginning of the Rebellion. So it seems 
that we can both buy and sell under the rule of a defensive policy; 
and so the logic in the phrase, "if you do not buy you cannot 
sell," as the effect of protective rates upon foreign imports vanishes 
at the touch of experience. 

I observe, moreover, in support of your doctrine that all non- 
competing imports should be exempt from imposts, which not being 
protective in operation should not be taxed ; that the tariff" lists 
published by the Bureau make free of duty all tropical productions, 
and all such commodities as do not interfere with, but rather pro- 
mote our industries — such as coff"ee, tea, cocoa, medicines of the 
growth of warm climates, dye stuff"s, gutta percha, grasses for the 
manufacture of paper, and nearly every kind and quality of goods 
that Ave cannot produce, with a very foAV exceptions, of unimportant 
value, such as wools coarser than can be grown in our climate, 
which on principle ought to be exempted from duty, where they do 
not displace our home products. 

D. You have several times spoken of protection and of free 
trade as if they were not fixed principles of public economy, but 
only means adjustable to the variant conditions of communities — 
expediences, rather than laws or philosophic rules, arbitrary in 
application. 

T. Right as to the point in general statement, but subject to 
such necessary modification as must protect such propositions, 




294 POLITICAL ECONOMY. 

made in the currency of discussion, from over-sharp construction. 
Bj the phrase free trade, ^Yhen I have spoken of it as the out. 
come of a policy rocjuired to prevent rivalry in domestic and for- 
eign markets, I meant that wild fantasy avowed by the unreflective 
of the party of free traders, wiiich allows and requires utter de- 
fencelessness under all circumstances, as if the whole world were 
one groat consolidated confederacy, or republic of merchants; 
allowing all inequalities of conditions and capabilities to work as 
they may, with the chance of survival only to the strongest— with 
no provision against casualties; no defence against abuses; no 
shelter for the weakness of immaturity — a brutal rule of mi'dit 
against right ; in a word, a logical law of practical lawlessness ! ! 

The essence of government is protection, whether the agencies 
and methods be directory, punitive, providential, or otherwise 
remedial. Human societies are not yet in the order in which it 
is promised that "lie shall have put down all rule, and all author- 
ity and power, for lie must reign till Jle has put all enemies 
under his feet," and " the lamb may safely lie down with the 
lion." 

I have not in any use of the term regarded free trade as it is 
calculated for the millennium ! On the contrary, I do not believe 
that in so broad a sense the principle can be established among 
diverse nations and people, even under a universal federation and 
a universal peace. Even if all nations were eijual in capital and 
skill, labor-power, and all the facilities and appliances of indus- 
trial production, might not a mischievous competition ensue, mak- 
ing it necessary to put uj) defences against aggression ? But such 
considerations as these apart, the universalists of trade restrict 
their policy to international exchanges. Their doctrine, and its 
regards are not free trade, but free foreign trade ; free domestic 
trade being totally disregarded. Of course I never mean such 
free trade as this, when I speak of it as the issue of a sound 
commercial policy. 

D. Restriction upon foreign trade is the only thing that they 
are called upon to resist. As for domestic commerce, that is 
entirely under the laws of nature, or, otherwise expressed, under 
the common law of demand and supply, and will take care of 
itself. 



INTERNATIONAL TRADE, 295 

T. But foreign trade must be under the same law, or some law. 
If it be a universal one, its supplies come into competition with the 
domestic in the common market, and if competition is in effect 
the war of trade, defence against it is justified. Their antagonism 
makes their relative economic values a matter of moment in the 
controversy. 

Fairly stated the conflicting forces stand thus : No nation or 
people derive more than one-tenth of their consumption from for 
eign nations. This is the whole strength of the commercial tie 
that binds distant regions and different interests in the legitimate 
bonds of brotherhood. The diversely situated and conditioned 
peoples of the globe are not twins or triplets or sextuples of each 
other. Their ex"change relations are a limited partnership, not a 
communism. The resulting necessary and healthful exchange of 
commodities between them does not really exceed five per cent, of 
their respective requirements, or inter-dependency. An amount 
equal to one-twentieth of their own products is the measure and 
limit of natural commerce, and, measured by the industries which 
do not appear, and are not measured by market prices, such as 
household and professional occupations, they are not effectively 
one in a hundred in the value of uses ; all of which suffer more 
or less by invasion, directly or indirectly, and always injuriously. 
But, waiving all these mischiefs, for their incalculable economic 
results, if we take the usual imports at one-tenth of a people's 
consumption, it is clear that the producers of the nine-tenths 
ought not to be put into restraint by the other tenth. 

D. One other difficulty must be disposed of, I think. It is con- 
ceded that the scholars and leaders in literature, and in economic 
philosophy, generally accept and advocate the system of thought 
and doctrine which you so zealously oppose. How do you recon- 
cile your conservatism with the leanings of the advanced intelli- 
gence of the time ? 

T. The free-trade school could take the subjects of political 
economy out of the domain of sound discretion, experience, and 
common sense only by making a science of it — by converting 
and transfiguring the business of life into a set of abstractions ; 
just as the Aristotelian syllogism proves, logically, that a man is 



296 POLITICAL ECONOMY. 

a goose, because both man and goose are animals, thence the 
inevitable corollary. 

D. Correspondence in a single particular may, however, be a 
measure of general conditions. Gladstone, for instance, estimates 
the growth of the general wealth of Great Britain by the growth 
of the income tax. Apparently trivial incidents are indications 
of the most general facts. In Washington City you do not find a 
front-door scraper at any recently built house, — showing the gen- 
eral great improvement of the city, especially of the streets and 
pavements, which are now wholly free from mud. Straws show 
how the wind blows. 

T. Mr. Gladstone, in 1866, used the money-Avorth of the British 
exports, as a measure of its surplus productions. He did not un- 
dertake the problem of the kingdom's welfare. If he had, he 
would have been obliged to consider some of the troubles which 
now, as Prime Minister, he finds almost, if. not quite, unmanage- 
able. Such as the enforced emigration, the pauperism, the dis- 
content, the crushing dependency upon foreign markets, the 
starving necessities of her manufacturers, including her book- 
makers ; the one, despairingly struggling to establish free trade 
abroad, and the others begging for copyright ; both meaning that 
if we don't buy and pay they cannot live. He has on his ifands, 
besides, Irish famine and threatened insurrection, with a fearful 
brood of other refractory chickens which are stretching the wings 
of the mother bird to their very tips. 

D. One thing more and I am done. You allow the expedient 
a commanding influence against the theoretical. How does this 
principle work upon the populace of a republic, in a case that re- 
quires present sacrifice in the matter of prices of the commodities 
of daily consumption, under a postponed expectation, or a glim- 
mering perspective of future compensation ? If your protective 
tariff enhances prices, and continues to enhance them until do- 
mestic enterprise, labor, improved skill, and home competition 
shall possibly reduce them again, how can you induce the people 
who live from day to day, and those whose increased expenses 
fall upon them, also, from day to day, to live on trust through the 
certain interval and its uncertainty of success ? 

^. Oh ! A statesman must follow, not lead the mob. He 



INTERNATIONAL TRADE. 297 

must be the worst of them if he would get the better of them — 
the vox populi is the vox Dei for him, and democracy believes in 
self-government only because it will have its way, and expediency 
is nothing after all but popularity ! ! So I understand your de- 
mocracy. This may be the demagogue's philosophy ; but it is not 
history. I do not say that the populace can see through a mill- 
stone, but they can feel its grinding ; and when theories eventuate 
themselves in palpable facts, every people will understand them 
without the critical ability of abstract speculation. 

But, ad Jiominem, the party which holds that every man is the 
best judge of his own interests, concedes the competency of the 
common people who rule the nation by their votes to administer 
their own affairs wisely. Take that. 

If, however, the practicability of protective legislation, looking 
away from prices to the higher and more permanent creation of a 
power which promises to produce values, were doubtful in pros- 
pect, the policy is not in that tribulation. It is not a telescopic 
squint at a distant result. Its effects are immediate, instant. 
What you call its prospects are the substance of things hoped for, 
as well as the evidence of things foreseen. Protection does not 
look at prices nor scare at them. It looks to power over prices 
present, as well as prospective, and equally realizes both. The 
mmc stans is in its grasp. The permanency of absolute law is 
its faith, and believing in the certainty of cause and effect, it has 
the now for inspiration as effectively as the future for experience. 
To reduce the proposition from theory to practice, observe that all 
enterprise is on the spring of the prospective. It is not what to- 
day is, but what to-morrow shall bring forth that governs its im- 
pulses and ventures. 

Say a revival of industry and its rewards are not only depen- 
dent upon the issues of a given policy, but even say the actual 
operation of the agencies concerned is postponed to a day six 
months after the date of the legislative act. The assurance which 
it gives, instantly brings forth the capital and awakes the credit 
of preparation, and the nation's prosperity is born in a day. Not 
only credit, but hope is capital ; because inspiration is power. 

Nobody but democrats doubt or fear the democracy: I mean 
the representatives of the people, or the people themselves, when 
20 



298 POLITICAL ECONOMY. 



1 



they have the time to judge policies by their results. In the late 
Presidential election the question of protection was fairly in issue, 
and being well understood in its operation upon the general pros- 
perity, it was intelligently supported. I do not assume that a 
political Congress can wisely adjust the details of a tariff law, but 
the community can judge it by its fruits. The British Parliament 
knows very well that it is not competent to arrange the rates of 
import duties safely and justly ; it therefore delegates the duty to 
experts, and accepts their report. In 1852 the Parliament ap- 
pointed a commission for this purpose, and without further inquiry 
confirmed its recommendations ; and notably, the object of that 
appointment was mainly to get rid of the ad valorem duties in the 
schedules then existing, although of the twenty millions of gross 
yield to the revenue, not more than one-quarter of a million came 
from that ra^-and-tag mode of assessment. 



CHAPTER XX. 
CLOSE OF THE DEBATE. 

D. You have impressed me with the opinion that the knowledge 
of business affairs does not lie open upon their surface reports ; that 
a lazy common sense, or the conceit of it, is not a philosophic 
directory of societary relations and conduct ; and that every man's 
opinions are not as good as every other man's, and a great deal 
better. That every man has a right to think for himself must be 
conceded, whether he thinks wisely or otherwise, even in matters 
so hai'd to understand that no one surely knows who understands 
them. In questions of law and medicine deference is usually 
given to experts; but, on the subjects of social and economic 
science, everybody is at liberty, and everybody must be com- 
petent, of course, because there is no admitted court of appeal 
and final authority, and there is no decision which every man is 
bound to respect. 

Pardon me, I am rather confused by the discussion. I was so 



CLOSE OF THE DEBATE. 299 

comfortable before these conversations began. Everything that I 
believed, or thought I believed, was unquestioned, because it was' 
a priori unquestionable. I had what bookkeepers call the foot- 
ings of all accounts, and felt perfectly posted as to the balance of 
the pros and cons of every question under discussion. But you 
have so ruthlessly run the ploughshare of cultivation through 
the surface of the flowery field, and torn it open for the seed and 
cross-harrowing of industrial culture, that I am turned into a pains- 
taking laborer, when I had thought that I was a leisurely in- 
spector of a gathered harvest of results. But I thank you for all 
the trouble you have given me. By the help of your method of 
study I have the hope that hereafter I may know assuredly the 
things that I shall learn, and be so much the less inclined to 
assume the things that I do not assuredly know. - 

P. I had no prepossessions to embarrass me, because I did not 
suppose that I knew anything. But I needed to be disembarrassed 
of an irreflective reverence for the popular or accepted authori- 
ties, which checked inquiry and growth in appropriated knowledge. 
I feel obliged to our teacher for a wholesome release from the 
hackney logic of the economic sects, generally used to assure their 
disciples, though incapable of convincing anybody else. I con- 
fess, however, that I am in some danger of laughing at the cur- 
rency logic of the illustrious system makers, and of doubting the 
exercise of reasoning in the data of statistics. 

T. I have not intended in these conversations to teach you an 
unreasoning skepticism in respect to figures or facts, but to use 
your reason under common sense rules. If I have been critical 
in the study of our subjects, and of opinions concerning them, I 
intended only to put up cautionary warnings, where theories were 
driving along at railroad speed, that you should " look out for the 
engine" at the cross-roads and switch-tracks- that stand open, 
endangering accidents by the way. 



APPENDIX A. 



Proportion of bank cheques, bank notesj bills, drafts, 
AND COIN respectively IN THE hmiking business of England and 
the United States. 

In Sept. I860, Sir John Lubbock reported that of £19,000,000 
received"at his bank, the cheques and bills constituted 96.8 per cent., 
bank notes 2.2 per cent., country notes 0.4 per cent, (all notes 2.6 
per cent.), and of coin 0.6 per cent.; or of credit money 99.4 per 
cent, and of coin only six-tenths of one per cent. ! ! 

In 1880 Mr. John B. Martin gives a table of the receipts of all the 
London banks at 99 per cent, of bills, cheques, and notes, and 1 per 
cent, of coin. 

In November, 1877, the late President Garfield, then a member of 
Congress, requested the Comptroller of the national banking system 
to institute an inquiry upon this subject, which resulted in the fact 
that in six days, of $157,000,000 received over the counters of 52 
national banks, only 12 per cent, was in cash, and 88 per cent, in 
cheques, drafts, and commercial bills. 

In this investigation the Comptroller of the Currency, Mr. Knox, 
has taken a leading position, which is accorded to him by the London 
Institute of Bankers. He has pursued this subject with great industry 
and success in the last two or three years. 

In his annual official report of December 5, 1881, he gives the 
results of the reports made to him, which show that, on September 17, 
1881, the total receipts of all the National Banks were in cheques, 
drafts, and bills — an average of 94.1 per cent, of the total ; those of 
the city of New York 98.8 per cent., while those of banks elsewhere 
than in the principal cities amounted to 81.7 per cent. 

This difference of proportions between the receipts in places where 
the business of exchange is best organized and those less well arranged, 
shows the force and use of system in the credit business of the country, 

(301) 



SOS- 



POLITICAL ECONOMY. 



and sliows, besides, how greatly tlie precious metals and their repre 
sentative circulating notes are eliminated from the marts of general 
commerce. 

As I cannot transcribe the report of the Comptroller in all its in- 
structive details (which are all given with their full effect), I must 
refer the inquirer to his Annual Report for 1881, which, I am allowed 
to i^ay, will be forwarded on application to whomsoever may require it. 

I add a comparative table of these percentages, compiled by Mr. 
Pownall, and read before the London Banker's Institute in Novenilier, 
1881 ; to which Mr. Knox has prefixed the report of the National 
Banks of New York City for September 17, 1881. 



i 



'Localities. 



New York 

London .... 

Edinburgh 

Dublin .... 

Country banks in 2G1 places 



Coin. 


Notes. 


Per cent 


Per cent. 


.55 


.65 


.73 


2.04 


.55 


12.67 


1.57 


8.53 


15 20 


11.94 



Cheques. 
Per cent. 

98.80 
97.23 
86.78 
89.90 
72.86 



"It will be seen that the pro|)ortion of cheques and drafts used in 
London does not vary greatly from that of the same items shown in 
the receipts of the banks in New York City. The proportions used 
in the banking business of the country districts is less, as in the United 
States it is less in the banks outside the cities; but the use of checjues 
and drafts in the country districts in the United States is nearly nine 
per cent, greater than in the corresponding districts in P^iigland." 

Mr. Knox gives another statement derived from official reports of 
the National Banks, collected under his orders, showing the proj)ortions 
of their receipts on the 17th day of September, 1881, thus: — 



Percentages of Total Receipts. 





Gold coin 


Silver coin. 

0.01 
0.18 
0.68 

0.17 


Paper 
currency. 


Cheques, 
drafts, etc. 


New York City 
Other reserve cities . 
Banks elsewhere 


0.54 
1.86 
3.31 

1.38 


0.65 

5 61 

14,27 


98.80 
92.35 
81.74 


United States . 


4.36 


94.09 



APPENDIX A. 303 

The Bank of France, with its 90 branches, has tlie entire control of 
the note circulation of the Empire, and is, therefore, in the position to 
report the propoi-tions of its own different kinds of circulation, paid 
and received ; but the business system of cheques and drafts, and other 
instruments of the set-off settlements, so largely used in England and 
tlie United States, have been very partially introduced in France, and 
its bank reports do not afford us a useful comparison, otherwise than 
as they illustrate the effects of the unlike usages of the different sys- 
tems of currency. 

For the data of this really important statistical question in the 
monetary system, I cannot too emphatically refer the studious inquirer 
to the report of the Comptroller of the Currency of the date December 
5, 1881, pp. 11-26. 

The Journal of the Institute of Bankers (London) of December, 
1881, estimating the service of Mr. Knox in this inquiry, and antici- 
pating his promised last report, says: "There can be little doubt that 
with his great ability and grasp of details, he will extract from them 
all the information which they can be made to yield." 



INDEX RAISONNE. 



Political Economy, what it is and is 
not, 9 
Autliorities in, 10 
A system, not a science, 11 
Remedial, not arbitrary, 11 
Empiricism, Baconianism, 12 
Uses, not essences, known, 12 
Study of tlie ensemble, 13 
Rule of investiocation, 13 
Subjects and objects of economic 

study, 14 
Deductive and inductive methods, 

both required, 14 
Heresies of the authorities, 15 
Doctrine of despair, 15 
Mischiefs of theory at worli, 16 
Man and his conditions, 16 
Divine order of society, 17 
Limits of the inductive system, 18 

Wealth— Definition of, 18 
The light ahead. 19 
Experience as a guide, 20 
Substances of wealth, 20 
Wealth and capital, 20 
Labor is capital, 21 
All utilities are riches, 21 
Property is worth what it yields, 

22 
English assessments, 22 
Wealth is well-being, 23 

Grou'i/i of Wealth — Labor value of all 
commodities, 23 
Original powers of the soil, 24 
Value of natural forces, 25 
Land, a machine, 25 
Vital and inanimsite machinery, 25 
Grammar, the mechanium of lan- 
guage, 26 

Occupation of the Earth — Man and land ; 
choice of location, 27 
Rknt, Ricardo's theory of. 27 
Choice of land under conditions, 28 
A pioneer chooses his match, 29 
The richest lands rejected, 29 
Men begin always with inferior 

machines, 30 
Abandonment of the best, 30 



Occupation of the Earth — 

Cosmopolitanism not true, 30 
Distributive law of settlement, 31 
Colonization, ruled by isothermal 

lines, 32 
Invasions and migrations, history 

of, 32 
The law and the facts, 33 
World-wide sovereignties, 33 
England's occupancy of India, 33 
Consequences of the law, 34 
The law in the United States, Ham- 
ilton, 35 
Federal Unions, 35 
The husbandman and landlord, 36 
Fl uman sustenance, provision for.36 
Famines in agricultural countries, 

37 
Inter-dependence of industries, 37 
Demand limited as tlie supply is, 38 
Narrowness of outloolc, 38 
Imperfect agriculture, 39 
Abundance of land waiting for cul- 
tivation, W 
The available in reserve, 40 
English agriculture. 40 
Effect of b ilanced industries, 41 
French agriculture, 42 
American sufficiency, 42 
Sufficiency a relative terra, 42 
Disorders the data of the dismal 

science, 43 
The law of nature, 43 
Fixed property the measure of 

wealth, 44 
Northern and Southern States com- 
pared, 45 
Land monopoly in England ; divi- 
sion of, in France, 45 
The French peasant a husbandnia7i, 

45 
Popular loan of Louis Napoleon, 46 
Agriculture in the United States, 46 
Virginia farming, 47 
Nature an economist, 48 
Solidarity of a true economy, 48 
August Comte, method of, 49 
( 305 ) 



306 



INDEX. 



Kent — Science of agriculture in ex- 
pectancy, 49 
Products of land and labor, differ- 
ence of, 50 
Property in land usurpation! 50 
Aryumcntiim ad ahsiurdtim. 51 
Fundamental principles, 51 
Land under the common law of 

property, 52 
Theory of value solves the ques- 
tion, 52 
Cost and value, 53 
Progress, with a better time coming, 

53 
Instances of amelioration of condi- 
tions, 54 
Specialties in inquiry, 55 
A part more than the wliole, 55 
Means'and demands of human life, 

66 
Consumption is reproduction, 56 
Tables prefiguie facts, 57 
The supernatural in the mechanical 

powers, 57 
Delegated omnipotence, 58 
Cause and effect, 58 
Matter conjoined with spirit, 59 
Dynamic force of coal, 59 
Auxiliary force and velocity of ma- 
chinery, 60 
Maciiinery the bone and muscle of 

science, 60 
Tyndall and Huxley verging upon 

spiritualism, 61 
Munificence and benevolence of 

mfiiianical inventions, (il 
Brute and human life, differences, 

62 
Design of life limits its duration, 62 
Entertainment for man and beast, 

63 
Rectification of appearances, 63 
Tlie exotic and the native in Brit- 
ish products, 64 
Foreign trade, true system of, 65 
Trade relations, natural law of, 65 
Foreign trade naturally supple- 
mentary, 65 
Free trade a misnomer, 66 
DomeMic commerce is more than 

huckstering, ()7 
Division of labor, Smith's doctrine 

of, abused, 67 
Commerce differs from trade, 68 
Statistics of foreign trade unre- 
liable, 68 
British and American reports de- 
fective, 69 
" Consumption the true measure of 
wealth, 69 



Rent — 

General welfare best measure, 70 

Improvement in travel and trans- 
portation a measure of wealth. 70 

Time and cost of transportation 
lessened, 70 

Facilities of commerce in growth 
of wealth, 71 

Summary of wealth - producing 
agencies, 72 

Cheapness and plenty supplanting 
dearuess and scarcity, 72 

Vastly enhanced well-being, 73 

Contrast of savage life, 73 

Fatnines in Judea, 74 

Vegetable and animal food, pro- 
portion of nutriment in. 75 

Substitution in clothing, 75 

Mineral supplies, progress of, 75 

Beneficent distribution of products, 
76 

Substitution, successive stages of, 
'6 

Tabular lists of, 77, 78 

Progress from inferior to superior 
of the same kinds, 78 

Another kingdom in the domain of 
the physical sciences, 79 

Knowledge is power, 79 
Population — Rate of increase, 80 

Various among Europeans, 80 

Inconstant rate of mortality, 81 

Inequality of survivals, 82 

The inductive system incapable of 
the problem, 83 

The grist of the Gradgrind system, 
83 

A priori leads to a posteriori, 83 

Mind has instincts as the body 
has, 84 

Design regulates fertility, 85 

Law ruling in order ; a basis of 
reasoning, 85 

The rule of law in disorder, 85 

Production of life least where its 
activity is greatest. 86 

Unequal activity of the vital func- 
tions, 87 

No constant quantity, 87 

Antagonism of the nervous and 
generative functions, 88 

Law of balance and counter-bal- 
ance, 89 

Iiulian characteristics, 89 

Counterpoise of the passions, 90 

Promise of harmony, 91 

The law works best where most 
needed, 91 

Amendment of conditions tends to 
adjustment of provision for life, 
153 



INDEX. 



30T 



Population — 

Waste of life not a remedy for, but 
a cause of, fecnniiity, 92 

Summary of the arp;umeat, 93 

Symmetry of J. B. Say's cate- 
gories, 93 

Confusion in the Say school, 94 

Say's triad is only a duad, 95 

His disLribution is nothing but ex- 
change of viilues, 95 

Blanqui and Ricardo on natural 
rate of wages, 95 

The protests of humanitarians, 96 

Insurrections of the laborers, 97 

Capital and wages born of civiliza- 
tion, 97 

Carey's law of wages, 98 

Labor and capital joint factors in 
production, 99 

The gain of the purchasing power 
of wages under accumulation of 
products, 99 

How increased wages results from 
increased productiveness, 99 

Productiveness of the human ma- 
chine dependent upon its condi- 
tion, lOU 

Better service commands better 
wages, 100 

General law, that only land and 
labor enhance in exchange value, 
101 

All improvements in production 
mean and intend greater cheap- 
ness, 102 

Labor-cost in cases of genius and 
in best soils, 102 

The enhancement of wages found 
in the elevation of the masses, 
103 

Progressive improvement slow but 
sure, 104 

Historical increase of wages in 
England and America, 10-4 

In France, 104 

Purchasing power of wages in do- 
mestic service, 105 

Tabular statement, 105 

Evidences of enhancement in wages, 
105 

Displacement of drudgery by art, 
106 

Song of the Shirt to a new tune, 106 

New wine bursts old bottles, 106 

Prices of agricultural products not 
a good standard of wages values, 
106 

Wages and expenses in Massachu- 
setts, 107 

Our census reports unreliable in the 
matter of wages, 108 



Population — 

Census reports of wages in the 
three last decades, table, 108 

Increase of machinery does not ex- 
plain decreased percentage of 
wages to products, 109 

Criticism of the census reports by 
the superintendent, 109 

Wages and profits confounded in 
the census tables, 110 

Other sources of error and uncer- 
tainty in the reports, 110 

English method of estimating the 
national wealth, 111 

Various estimates by English ex- 
perts, 111 

Vices of the income tax estimates 
and of values of domestic ex- 
ports, 112 

Guess at the rate of increase in 
wealth of Great Britain and the 
United States, 112 

Rise of the masses the surest 
measure of growing welfare, 113 

Conclusion ns to wages in the United 
States, 113 

Tendency to equality of benefit in 
the ratio of growth of wealth, 114 

Wages the index of productiveness, 
114 

Illusions of averages and percent- 
ages in statistical inferences, 114 
Money — What money is, 115 

Various mediums of exchange, 116 

iSIoney nota standard of values, 116 

Precious metals matters of mer- 
chandise, 117 

Legal standard, 117 

Various standards of money value 
in past times, 1 17 

Changes in the money- account value 
of a pound of silver, 118 

Exchange value of money declines 
like other things, 118 

Reduced burden of British debt in 
money values, 1 18 

Production of the precious metals 
in past time, 119 

Production and consumption in the 
arts in recent years, 120 
Functions of Monet — Money not dead 
capital, 121 

Various kinds of money adapted to 
various uses, 121 

Precious metals command their use 
by their fitness, 122 

The special qualities of the precious 
metals, 122 

Their quality of convenience the 
essence of the money service, 123 



808 



INDEX. 



Money and riucEs, T24 

The nionpy in use, not tlie equiva- 
lent of the exchanges, 124 

Montesquieu, Hume, and Mill in 
error, ]24 

Money not a measure, as pounds, 
weights, and yardsticks are, 125 

Hume in contradiction to himself, 
125 

Mill likewise and unwise, 125 

Settlement by set off, 126 

Proportion of money to amount of 
business exchanges, 126 

Influences upon prices, 127 

Unmeasurable effects of outside 
causes, 127 

Equivalence of money has no re- 
lation to the facts of exchange, 
128 

Money of account, the standard, 
128 

Metaphysics in the common mind, 
129 

Kelation of prices to supply of the 
precious metals. 129 

Uncertainty of prices in the cen- 
turies, 130 

Thomas Tooke, authority of, 131 

Quantity of currency not a regula- 
tor of prices, 131 

Expansion of currency an effect, 
not a cause of, advanced prices, 
132 

Increase of currency with decrease 
of price, 132 

Prices rose and fell under influx of 
coin, 133 

Facts against logical abstractions, 
133 

Montesquieu's demonstration of 
equivalence of money and price, 
133 
Standards — ffold and silver, or both, 134 

Mono- and bi-melaUism in currency, 
134 

Conventional value, an ideal stand- 
ard, 135 

Variance in valueof gold and silver, 
historical, 135 

Increase of gold has not inflated 
prices in fifty years, 136 

Legal tender, an aibitrary deter- 
mination of value, 137 

Effect of quantity of the precious 
metals, 137 

England's preference of gold as the 
unit, reasons for, 138 

Merchants, a universal common- 
wealth, 138 

Compromise of the Latin nations, 
138 



Standards — 

Commerce in the precious metals, 
139 

Cosmopolitanism, its limitations, 
139 

Tlie precious metals, a national in- 
terest and concern, 140 

Relative circulation of metallic and 
paper money in United States 
and in France, 140 

Non-exportable currency, 141 

Patriotic service of the non-export- 
able during the suspension of 
specie payments, 141 

Debasement of lawful coin not 
fraudulent, instances, 142 

Convenience of coinage, 143 

Depreciation, in France and Turkey 
and in the United States, 143 

Surplus of gold and silver, com- 
modities of trade, 144 

Money only an instrument of ex- 
change, not of its substance and 
its substance indifferent, 148 

Substances of money (repetition), 
145 

Not equivalents, 145 

National money and balance of 
trade, 145 

Office and service of specie reserve, • 
146 
Money — a producer of values, 146 

Labor, "the creator of wealth," 
rectified, 146 

Compass of the term, 146 

Capital in production, a co-efficient, 
147 

The partners in production, 147 

Capital, 147 

Savages, 147 

Capital the primum mobile, 148 
Interest — the earning of money, 148 

All are hirelings who serve, 149 
Money of Account, 149 

Ideal money, the macutes of the 
Africans, 150 

Bishop Berkeley, money of account, 
150 

Act of Congress, Hamilton, Jeffer- 
son, 150 

Colwell on money of account, 150 

What it is, 150 

Marquis Garnier, detail of money 
of account, 150 

Kelly, author of " Universal Cam- 
bist," standard of the precious 
metals, 151 

Units of value without correspond- 
ing coins in England and America, 
151 



INDEX. 



509 



Monet of Account — 

Precision in the weight of the sov- 
ereign, 15'^ 

Anecdote of the poultice, 152 
Credit Money, 153 

Money medium, its convenience 
and effectiveness ; its essentials, 
153 

Discussion of the derivation of the 
word, useless, 153 

Money and the mechanical powers, 
ditfereuce of qualities of, 154 

Cost of the fractional note currency, 
154 

Unit of valuej in different countries, 
155 

Measures of space ideal, as well as 
measures of value, 155 

Standard of value, disturbance of, 
troublesome, 156 

Denominations of circulating notes, 
governed by convenience, 156 

Relative numbers of the denomina- 
tions outstanding, 156 

Proportion of coin to paper notes 
in circulation, 157 

Notes, deposits, and coin aggre- 

. gated, 157 

Ratio of coins and paper money in 
circulation, 157 

Total requirement of money, guess- 
ed at, 158 

Equivalence of money to exchanges, 
158 

Money values exchanged as often 
as those of commodities, 158 

Set-off", the idea of money not in 
its substance but in its service, 
159 

Influx of the precious metals, how 
disposed of, 159 

Relative circulation of silver and 
gold, 160 

Money eliminated by improved or- 
der in business, 160 

Banks and bankers are clearing- 
houses, 160 

Supply and demand does not ex- 
plain prices, 160 

Increase of gold and silver, with in- 
crease of paper money besides, 
has not enhanced prices, 161 

Nor will any enhancement of their 
product depress prices, 161 

The precious metals and paper cur- 
rency, vicarious, mutually, 161 

Stability of value as between debtor 
and creditor to be secured, 162 

Steadiness and graduahiess in 
changes. Relative rise of land 
and labor, 162 



Banking, 163 

Two kinds of banks. The earliest 
bank of discount and deposit, 163 

Banks of discount and deposit, 164 

The service of the banker, 164 

Simple barter — its losses, 165 

Amount of deposits in banks, 166 

Savings banks and accommodation 
loans, 166 

Bank advances, an anticipation of 
property returns, 166 

Goldsmiths, the bankers of London 
in A. D 1661, 167 

Amount of deposits. The comp- 
troller's data, 167 

Vast deposits not officially reported, 
168 

Money otherwise idle, moves all 
our manufacturing enterprises, 
168 

Smith and Mill, errors in the func- 
tion of money, 169 

Analogy and differences between 
circulation of the blood and of 
money, 169 

Panics and pressure their causes, 
170 

Credit money a better correspond- 
ent to exchanges than coins, 171 
Banks of Issue, 171 

Early banks and brokers, 171 

Earliest bank of issue in A. D. 
1658. None in effect before 18th 
century, 172 

Bank of England notes of very 
limited circulation in 17th cen- 
tury, 172 

The advances of civilization in the 
generation preceding the bank 
note, 172 

Inventions arise out of conditions, 
172 

Bills of exchange — the Jews, 172 

Bills of exchange diff'erent from the 
circulating note, 173 

The banks of Venice, Barcelona, 
Genoa, earlier than that of Swe- 
den, 173 

Those were mainly fiscal agents of 
their governments, 174 

Constitution of Bank of Venice, 174 

Depreciation of coins, 174 

Premium upon bank credits, 174 

Standard of value, 175 

The standard, a money of account, 
175 

In our clearing houses the medium 
is nearly all credit, 175 

Indirect barter, 175 
Barter relieved of a medium 
through set-off, 176 



310 



INDEX. 



Banks of Issuf — 

Basis of the premiums in Bank of 

Venice credits, 176 
Depreciation of coins. 176 
In Etighuul in the 17tii century, 176 
Debased coin the cause of bank es- 

tablislinicnts, 177 
Bank of Venice founded upon a 

forced loan, 177 
Our first national bank based upon 

the nation's debt, 177 
Washington ard Hamilton on the 

basis of a national hank, 178 
Adam Smith's wagon-way through 

the air successfnll3' realized, 178 
Adam Smith would have paper 

only a representative of metallic 

money, 179 
Authority upon opinion, 179 
The Bank of Genoa, 179 
" Pay as you go," 179 
Its cautious policy, 180 
Charter exemptions, 180 
Care of gdvernnient over the circu- 
lation, 180 
Kemissness of the Federal Govern- 
ment in rehition to our paper 

currency, 181 
The national banking system has 

reclaimed and exercises the right, 

181 
The Bank of Genoa did not furnish 

a circuhititxj note, 181 
Inconvenience of our silver dollars, 

182 
The precious metals, an indorser 

of the note, 182 
The Bank of Genoa extended, its 

accommodations. 182 
A clearing house, 182 
The circulating note a deliverance 

from the coin nuisance, 182 
Large privileges conferred upon 

the bank, 182 
Inherent ills of coined money, 183 
Gold and paper during suspension, 

183 
Contributors to the capital of the 

Bank of Venice like the British 

consols, 183 
The consols described. 181 
National loans sold at discount, 184 
English and American, 184 
The policy of such sales at a dis- 
count, 185 
Bepudiation of national debts, 185 
Bank of Amsterdam, ]8() 
llollaml's maritime commerce, 180 
Cromwell and Colbert followe<l by 
Louis XVL and Charles II., 187 



Banks of Issue — 

Faith in the existence of the sub- 
stance serves as well as the facts, 

187 
The bank sound in business though 

without capital for fifty years, 

188 
Causes of its failure — the principal, 

that it did not make its loans 

transferable. 189 
Government debts, 189 
Traffic in national debts, the origi- 
nal subscribers not lenders, 190 
Government protected the currency 

which it authorized, 190 
The notes kept nearly at par by an 

interconvertible process, 190 
Flexibility of the currency, 191 
Dr. Rush's theory of the spleen, 191 
Usury, interest — money of account 

the only true measure, 191 
Bank of Hambirg, 192 

The new unit of value, the marco 

banco, premium upon, 192 
What is to be done tor a standard ? 

192 
Spanish milled dollars in reserved 

rent, 19:5 
Instability of coin values. 193 
Banks without issue, useful in large 

cities, 194 
Their certificates of deposit not as 

serviceable as circulating notes, 

194 
The modern .system of banking 

traced, 194 
Bank of England, 194 

Depreciation of the coins, 194 
Agitation of the currency question, 

194 
Mr. Colwell's " Ways and Means of 

Payment" Carey, 195 
General commendation of Colwell 

and Carey, 195 
English eft'orts to remedy the coin- 
age nuisance until Elizabeth, 195 
Simple deposit banks not answer- 
ing, 196 
Improvements must be forced by 

felt necessities, 190 
Speculations of every sort, 196 
Inspired projectors, 197 
The advantage of the after thought, 

197 
Genius and experience, 197 
The bank charter of England smng- 

gleu into eflect in disguise, 198 
The whole capital converted into 

national debt, 198 
The credit character of the bank's 

securities, not its mischiefs, 198 



INDEX. 



311 



Bank of England — 

Substance of its capital. 198 

The only joint stock bank for Lon- 
don from 1694 to 1834, 198 

Condition of the bank in 1877, 199 

Safe amount of reserve, 199 

Wild changes of bank rates of in- 
terest, 199 

Causes of fluctuating rates, 199 

Money market and food market, 
199 . 

Eminent uses liable to great abuses, 
201 

Connection between Bank of Eng- 
land reserves and rates of inter- 
est, 201 

Banking and issue departments — 
the charter, 202 

Liabilities, 202 

Suspensions of the bank, 208 

A pinch or nip explained, 203 

Cautionary signals frequent, 204 

Business disasters resulting, 205 

The Directors implicated in produc- 
ing oppressive rates, 205 

Profits under high rates, 205 

Absurdity of the restriction in the 
charter. 206 

A bank director's justification of 
plunder, 206 

Instant convertibility the aim at 
whatever resulting mischief, 207 

Other banks in the United Kingdom, 
208 

Banks of Scotland, 208 

Varied American experience, 208 

Failures of systems, 208 

Failures of English and American 
banks compared, 209 

Bank of the United States — failure, 
209 

Suspensions of Bank of England, 
209 

Different conditions of the two 
banks, 210 

Recuperative power in human na- 
ture and business, 211 

Discount upon our State bank cur- 
rency, 211 

Dusiness disasters, 212 

Mr. Chase's conditions of a sound 
paper currency, 212 
Our National Banking System — its 
securities like those of Bank of 
England, 212 

Difference between the systems, 
213 

Redemption by the Treasury, and 
adjustment of the security to the 
issues, 213 



Charactkr and Qualities of National 
Bank Notes, 213 

Protection of depositors, 213 

Danger from depositors, 214 

The Government not a party in the 
banking business, 214 

Intervention of Comptroller for ben- 
efit of creditors, 215 

Double liability of shareholders, 
215 

Unlimited liability, inequitable, 
215 

Impolicy of unlimited liability, 215 

"Limited liability" in joint stock 
corporations, 216 

Danger from deposits proportioned 
to their comparative amount to 
the notes, 216 

"Deposits" for the most part debts 
of the depositors, 216 

Depositors first in a run upon banks, 
217 

Notorious danger of the old State 
bank system, 218 

Bad banking, revulsions in business, 
218 

The attendant i-isks of credit, 219 

Adam Smith's limitation of paper 
money to the sum of its metallic 
base, 219 

Credit money represents the values 
in exchange, 220 

Popular opinion accords with Smith, 
220 

The failure of this doctrine in the 
case of the Bank of England, 220 

Restricting issue in the first Na- 
tional Bank Act, repealed, 220 

National bank, adaptation of sup- 
ply to demand, 221 

Bank of France totally abandoned 
the equivalent reserve policy, 
221 

Bonnet's conversion in faith, 222 

A circulation without a metallic 
base, 222 

Smith's wagon-way, 222 

Bonnet on irredeemable currency, 
222 

Discounting the future, all enter- 
prise looks to its future, 223 

Time-honored experience inveter- 
ate, 223 

England in 1866 followed the ex- 
ample of France, maugre her 
orthodoxy, 223 

Obstinate adherence to precedents, 
224 

The guidance of precedents, 224 



312 



INDEX. 



Nationai, Bank Notks — 

History of llie liank of Frnnce un- 
der its great trial, 224 

Strength of a bank measured by its 
cash reserve, 225 

Government control of the Bank of 
France, 225 

Silver in France — mitigation of 
forced legal tender in the United 
States and in France, 221) 

Desolation of France in 1870 de- 
scribed. 220 

Steadiness of French financial man- 
agement. 227 

The bank's advances. 227 

The batik under full sail in the 
tempest, 227 

Vast increase of its circulatioti, 
diminution of reserve and its re- 
covery, 227 

The unfavorable balance of trade 
damaged the credit of the circu- 
lation, 228 

The bank paid and received specie 
freely during its legal exemption, 
22« 

Dividends and price of shares in 
187(), 227 

Financial prosperity of the French 
Government, 227 

Macaulay on the national debt and 
resources of England, 228 

Protection of national industries, 
228 

The national money sufficient when 
protected from " the money of 
the world," 220 

A well guarded foreign trade re- 
lieves from the necessity of specie 
reserves, 22'.) 

Favorable lialance of trade keeps 
baidis safe without the basis of 
coin, 2;>0 

Theory and art distinctly one, 230 
The Circulating Notk is the money of 
the public, its qualities, 280 

The service of the bank note iu our 
Rebellion cstimaleil. 231 

Depreciation and recovery of our 
note circulation, 2ol 

Unity of gnvernnient. A multitudi- 
nous national bank, 282 

Dillerence between coin and paper, 
and likeness, 282 

The Treasury cannot be a money 
dealer as a bank of issue is, 282 

Greenbacks and national bank 
notes, likeness and uniikeness, 
232 



Thk Circulating Note — 

Fiscal agency banks, difference of 
our national banks. 282 

The greenback policy would not 
dispense with local banks, 232 

Dingers of the substitution of 
heterogeneous banks, 288 

Discussion of the Greenbackers' 
plan declined for lack of infor- 
mation, 283 

The use of the banking system is 
in its convenience, 288 

Collocation of bank oftices, 234 

Supervision of the banks, 284 

'J'lie freest and best ever devised in 
resf)ect to distribution, 284 

Excellence of the Scotch system of 
banking, 284 

Scotch banks allow interest on de- 
posits, land, or bonded securities; 
advantages of this policy, which 
would break other banks; they 
are eli'ectively credit agencies, 
284 

Small notes, no fear of driving out 
specie, 284 

jNlutual care of each other by the 
people and the banks, 234 

Distiibution and collocation of tho 
Scotch banks, 284 

Distri oution in our Northern States, 
234 

Proportion of circulation to popu- 
lation in Scotland and in Eng- 
land, 235 

Col well ou Scotch banking .system, 
235 

Limitation of paper money to that 
of specie absuril, 285 

Provision of money not calculable, 

28(; 

National banking system adjusts 
the provision to the need, 23() 

In ditt'erent localities, the require- 
ment varies, 23(} 

California and Virginia in this re- 
spect, 28C 

Money eliminated by clearing 
liouses. 2315 

l-lngland an example, 236 

Elasticity of the circulation re- 
quired, 2.'jG 

A spiral spi-ing, 287 

The natioiiiil banks' adjustment to 
requirement, 287 

The national banks do not draw a 
double interest upon their de- 
posited bonds by the use of the 
notes issued upon them, 287 



INDEX. 



313 



The Circdlating Note — 

Abfitements of customary rates of 
interest, 288 

Losses and expenses of the banks 
pro rata chargeable to the notes, 
239 

Premium upon, anrl declining value 
of the bonds, 230 

Circulation of country and city 
banks contrasted, 240 

Banks that refuse the notes, 240 

Notes in inverse ratio to business 
of the banks, 240 

Measure of wealth by proportion 
of fixed to floating capital, 241 

Organization of business and elimi- 
nated money circulation, 241 

Explanation of exceptions, 241 

General conclusions, 241 

Two and two do not always make 
four, 242 

Caution in logic, 242 
International Trade, 242 

Its glorification, 242 

The history of international trade 
between civilized and savage na- 
tions, 242 

George Thompson on the devasta- 
tion of India, 243 

Explanation of the mischief, 244 

Character of trade until the begin- 
ning of the present century, 244 

Thp rule of international commerce, 
245 

True/re;^ trade is compulsory, 245 

True commerce grounded upon dif- 
ferences between the parties, 245 

Commerce and trade, the difference, 
245 

True commerce, 245 

Commerce of diverse climates, and 
of topographic differences, 246 

Commercial exchanges, supplement- 
ary, 246 

Substitutes for foreign products, 
246 

Free trade, resisting manufactures, 
commits itself for industrial 
home drudgery, 247 

Manufactures and progress, 247 

Protection relieves non-competing 
foreign products from taxation, 
247 

Tariff for revenue only, inflicts ex- 
cises upon home products, 247 

Tariff for revenue is taxation in in- 
tention and operation, 247 

Counteivailing duties, Clay and 
Webster, 247 

Infant manufactures, 248 
21 



iNTEBNATIONAt TrABE 

Clay and \Vebster were compro- 
misers. 248 
The tariff charged with class legis- 
lation, 218 
Instances of class legislation, patent 

laws, etc., 248 
Vagueness of the charge, 248 
Lending money not a monopoly to 

the borrower, 249 
Bonuses. Colbert, European bo- 
nuses, 249 
Subsidies and gifts of public lands, 

250 
Justified by their diffusive benefits, 

250 
Not exactly protective, 250 
Distributed benefit to the whole 
community takes a favor out of 
class legislation, 250 
Protectkjn is not taxation, 251 
Import duties not taxes, 251 
Difference in four points — ad valo- 
rems alien to the principles of 
protection, 251 
Not in essence revenue measures, 

251 
Blackstone's definition of taxes, 252 
Protection by Noah Webster, 252 
Duties have yielded usually niue- 

tenths of the revenue, 252 
Similar effects from various agents, 

252 
The Zolverein purely protective, 
its rule and rates of charges, 252 
Specific duties. 253 
Pol'cy of the Zolverein not for re- 
venue, 253 
Adaptation of the Zolverein to pro- 
gressive improvement in produc- 
tion, 253 
Triumphant results. The like his- 
tory of every advancing nation, 
253 
Rule of taxation by assessed values, 

254 
Protection draws no insidious line 
between luxuries and necessa- 
ries, 254 
" Tariff for revenue" guilty in this 

respect, 254 
Protection minds its own business, 

254 
Its free goods, 254 
Foreign wools, 255 
Domestic wool interests, 255 
Economic wisdom as effective in 
national growth as its written 
constitution, 256 
Fate of the nations ruled by their 
care of their industries, 256 



314 



INDEX. 



Protection — 

Modes of defence, change with the 
change of conditions, 25G 

England's change of method in 
change of relations, '25(5 

Interference with private freedom 
of avocations, 257 

Class legislation, inequality of tax- 
ation, and interference with per- 
sonal liberty. Free trade ab- 
stractions, 257 

Fallacy of every man's competency 
to choose his lot in life, 257 

Impertinence in the question, 257 

Protection secures the opportimUies 
of choke in business, 257 

Free domestic commerce and free 
foreign trade, 258 

"The world governed too much," 
258 

Instances of necessary government 
interference, 258 

Exceptions to rules. The dodges of 
untruths, 258 

Distribution of benefits granted to 
first-hand beneficiaries, 258 

Laws granting special privileges. 
259 

"The greatest good to the greatest 
number," a justification of the 
oppression of minorities, 259 

The hermaphrodite philosophy of 
democracy, 259 

Free trade, 259 

The most advanced minds, the most 
protruded only, 259 

Opprobrious epithets, the ammuni- 
tion of free traders, 260 

Instances. of their use by responsi- 
ble authorities of the free trade 
party, 2(30 

Implied reproaches to Washington, 
Jefferson, Madison, and Hamilton, 
2lJ0 

"That government is best which 
governs least," 2f)l 

Double aspect of civil government, 
control and providence, 261 

" The devil's own government," 
201 

The true creed of democracy, 261 

Always for prohibition, 261 

The requirements as well as the 
restraints of goverpment, 262 

Diversities of avocations required, 
262 

Census report of great diversity and 
number of pursnit.s, 262 

Provision for employment of wo- 
men, 262 



Protection — 

Household industries supplanted by 
modern machinery in factories, 
268 

Hamilton's report of household 
manufactures in A. D. 1791, 263 

The courtes}' of chivalry enslaves 
and debases women, 263 

Wages of women in factories in 
1850, 1860, and 1870, 264 

Women's adaptation to the modern 
industries indicated, 264 

Kinds of labor in which they are 
employed in factories, 264 

Protection of their industries de- 
manded, 264 

Idleness of women, their perdition, 
264 

Formal enfranchisement only avail- 
able with freedom of industry, 
264 

Freedom to all capabilities in choice 
of occupation, 265 

Cosmopolitanism not within the 
province of national governments, 
255 
Laissez /aire devolves self government 
upon its enemies, 265 

!^elt-government! 265 

Proteciion is patriotic, communism 
of nations is not, 266 

Incapacity of cosmopolitanism, 266 

National relations to it, 266 

Absurd and impracticable levelness 
of inherent diversities, 266 
Laissez /aire sustains all ilie rules of in- 
equality, 267 

No outside rows to his corn-field, 
267 

General Jackson a protectionist, 
his letter to Dr. Coleman, 267 

His doctrine of the diversity of 
industries, 268 

Fluctuations of the foreign wheat 
market, 2()8 

British free trade has made English- 
men dependent upon foreign sup- 
plies, 268 

Effects of broken balance of indus- 
tries upon England, 268 

Future dependence a result. Our 
rivals in the food market of Eng- 
land, 268 

General Grant concurs with Gen- 
eral Jackson, 269 

Home Market, 269 

Division and proportion of the in- 
dustrial nations, subsisting, 269 

Proportion of pi-oducers of raw ma- 
terials to manufacturers in Eng- 
land, 269 



INDEX. 



315 



Protection — 

England dependent upon foreign 
markets for their manufactures, 
269 

England's industries on a see-saw, 
a metropolis of trade, 270 

Her morning drum-beat, a host of 
huckster drummers, 270 

Her circular hunt, 270 

Every man's place kept open for 
him, 270 

Abundant provision and thence 
equitable distribution, 271 
History of Protection in England and 
the United States, 271 

Not indifferent to practical results 
of theory, 272 

Truths are dynamics, 272 

British protection for more than five 
centuries, 272 

Duties upon foreign bar-iron, 272 

Repeal, 272 

Rates of duty, 272 

British protection not yet aban- 
doned, 273 

Protection in the United States, 273 

Its stages, 273 

Panics, bankruptcy, from 1834 to 
1842, 274 

Failure of national credit, 274 

Van Buren groaned out of office, 
Washington's oracle, 275 

Tariff of 1860, 275 

Infant manufactures! 273 

History of the baby, 275 

Protection 'as a sick-nurse, 276 

Protection in the last twenty years 
triumphant, 276 

Import duties not taxes but answer 
the end, while "revenue" tariffs 
fail of their end, 276 

Hostile interests account for its 
instability, 276 

Southern hostility and foreign in- 
trigue, 276 

Bouncing Jack, 277 

The British boast of perfectly free 
trade, statistical abstract, 277 

British excises collected at the 
custom-house not protective, 277 
British Countervailing duties are in all 
respects protective. 278 

Fifty millions per annum of coun- 
tervailing duties, 278 

Free trade impracticable, 279 

Meaning of the word coicntervail, 
279 

Protective duties are simply coun- 
tervailing, 279 



History of Protection — 

Protective agitation revived in Eng- 
land—The London Times, 280 

Free trade has overdone itself, 280 

Relaxation of restrictive policy by 
France in 1860, 280 

France retained 25 to 30 per cent, 
of protection in that treaty, 280 

The United States require larger 
rates of duties than France, 281 

The French reservations in that 
duty a model of pi-otection, 281 

Rates of French duty upon certain 
articles, 281 

The treaty truly indicates the in- 
dustrial capabilities of France, 
281 

Reflected effect of duties upon do- 
mestic prices, 282 

The duty on pig-lead in 1845, and 
price after reduction of duty, 282 

Interest of importers in reduction 
of duties, 282 

The producer pays the duty, 282 

The reduction due to native pro- 
duction, 283 

Protection holds foreign imports 
down to a fixed maximum, 283 

Why is England so industrious in 
pushing her free-trade theories 
upon us if she does not bear the 
duties imposed upon her exports, 
284 

When the foreigner has the monop- 
oly the consumer pays the duty, 
284 

Home competition throws the duty 
on the importer, 284 

Drawbacks in evidence that the 
producer pays the duty, 284 

Countervailing duties have the 
same meaning, 285 

Absolute prohibition so much more 
of the same thing, 285 

Losses by protection are in values 
exclusively, 285 

The loss in values essentially com- 
pensated, 285 

Present compensation, 285 

Other effects, 285 

Growth of individual, promotes re- 
lative life, 285 

Nationalism auxiliary to cosmo- 
politanism, 286 

Protection regards the practical, 
286 

Expediency the rule, 286 

Protection the route towards free 
trade, 286 



316 



INDEX. 



HisTonT OF Protectfon — 

Duties reflected upon domestic 
prices, 28() 

Dnvid A. Wells's nrpument on 
pip; iron and salt ; his et^tiniiited 
reduction of price on four arti- 
cles $48,70(),0()(). 287 

Amount of duty upon competing 
foreign products iind rate, 287 

Product of American manufactures 
for the year 1859 and for 1867- 
68, 287 

The nrgiimentttm ad hominem ab- 
surdity, 288 

The economic consequence, tax only 
non-competing imports, 288 

Anti-cosmopolitan in operation, 288 

Ad rdlorems alien to the principle of 
protection, 281) 

Their had qualities and effects, 280 

Taxation as a policy or expediency, 
281) 

Ability and availability the cus- 
tomary rule, 2'.)() 

Taxation upon consumption im- 
practicable. Inequality of bur- 
den, 21X) 

Inhumanity of taxation upon con- 
sumption, 21)0 

Protection kindly discriminates, 200 

T;ix:ition on consumption ruthless, 
2110 

Tariffs for revenue only and for 
revenue with incidentnl protec- 
tion hiidly mixed in principle, 200 

Ahviiys failed even for revenue, 200 

A tiiriff for revenue is a tax, for 
protection, otherwise, 201 

Tariffs for protection marked by 
great increase of foreign con- 
sumption, 201 

Prices have no arbitrary efTect, 201 

Cost relative to means of purchase, 
201 

Lincoln's truism concerning prices 
and payments, 202 

Apothegms not explanations, 202 

Protection prevents monopolies, 203 

General advantages of protective 
duties, 202 

Only annuitants and idlers injured 
by protection, 202 

Statistics prove that protection is 
favorable to foreign trade, 202 



IIlSTOl^Y OF ProtRCTION 

Buying and selling both greatly in. 
creased under protection, 203 

"If you do not buy you cannot 
sell" fails, 208 

Exemption of all non-competing 
imports, 208 

Modified meaning of free trade. 203 

The essence of government fully 
stated, 204 

Free trade not practicable in any 
conditions, 204 

The ordinary free trade doctrine is 
only i'reQ forrit/ii. trade, 204 

Foreign trade must he under the 
law of demand and supply, 205 

Values of imported to iiome pro- 
ductions are not more than as 
one in a hundred, 205 

The free-trade school manufactured 
a science to escape the practical 
truth, 205 

Gladstone did not estimate the vi^el- 
fare in his estimate of the wealth 
of England, 206 

Gladstone's troubles as Prime 
l\Iinister, 206 

The practicability of protection in 
a po[)uiar government, 206 

The ad hominem argument with the 
Democrats, 207 

Protection has the present for de- 
nionstrution and conviction, 207 

The prospective is the inspiration 
and impulse of all enterprise, 207 

Its instant operation by anticipa- 
tion, 207 

Only Democrats doubt democracy, 
207 

The late presidential election indi- 
cates the capacity of the people 
to understand a policy by' its 
results, 208 

The felt incompetency of Parlia- 
ment to arrange the details of a 
tariff, 208 

The English horror of ad valorcms, 
208 
Appendix, 801 

Proportion of credit money to cash 
in baidfing, 801 

Interest felt in the inquiry in Eng- 
land and America, 308 



CATALOGUE 

PRACTICAL Al MIMC BOOKS, 



FXJBLISHEIi BTT 



HEIET CAKET BAIED & CO., 

Industrial Publishers and Booksellers, 
NO. 810 ^W^ALNUT STREET, 



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postage, at the publication price. 

S^ A Descriptive Catalogue, 96 pages, 8voc, will be sent, free of postage, to any 
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ARLOT.— A Complete Guide for Coach Painters. 

Translated from the French of M. A rlot, Coach Painter ; for eleven 
years Foreman of Painting to M. Eherler, Coach Maker, Paris. By 
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Practice of Coach and Car Painting and Varnishing in the United 
States and Great Britain. 12mo. ...... $1.25 

ARMENGAUD, AMOROUX, and JOHNSON.— The 
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Forming a Complete Course of Mechanical Engineering and Arciil- 
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Armengaud the younger, and Amoroux, Civil Engineers. Rewritten 
and arranged with additional matter and plates, selections from ana 
examples of the most useful and generally employed mechanism of 
the day. By William Johnson, Assoc. Inst. C. E., Editor of " The 
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1 



2 HENRY CAREY BAIRD'S CATALOGUE. 

ARROWSMITH.— Paper-Hanger's Companion : 

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ASHTON.— The Theory and Practice of the Art of De- 
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Giving full Instructions for Reducing Drafts, as well as the Methods 
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any Required Reed, with Calculations and Tables of Yarn. By 
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BAIRD.— Letters on the Crisis, the Currency and the 
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By Henry Carey Baird. Pamphlet 05 

BAIRD. — Protection of Home Labor and Home Pro- 
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By Henry Carey Baird. 8vo., paper 10 

BAIRD.— Some of the Fallacies of British Free-Trade 
Revenue Reform. 

Two Letters to Arthur Latham Perry, Professor of History and Politi- 
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Pamphlet 05 

BAIRD.— The Rights of American Producers, and the 
Wrongs of British Free- Trade Revenue Reform. 

By Henry Carey Baird. Pam])hlet 05 

BAIRD. — Standard Wages Computing Tables : 

An Improvement in all former Methods of Coraj)utatioD, so arranged 
that wages for days, hours, or fractions of hours, at a specified rate per 
day or hour, may be ascertained at a glance. By T. Spangler Baird. 
Oblong folio $5.00 

BAIRD.— The American Cotton Spinner, and Mana- 
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A Practical Treatise on Cotton Spinning; giving the Dimensions and 
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HENRY CAREY BAIRD'S CATALOGUE. 3 

BAKER.— Long-Span Railway Bridges : 

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BATJERMAN.— A Treatise on the Metallurgy of Iron : 

Containing Outlines of the History of Iron Manufacture, Methods of 
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Royal School of Mines. First American Edition, Revised and En- 
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from the Report of Abeam S. Hewitt, U. S. Commissioner to the 
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BEANS.— A Treatise on Railway Curves and the Loca- 
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BELL.— Carpentx'y Made Easy : 

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Tables. Illustrated by 38 plates, comprising nearly 200 figures. By 
William E. Bell, Architect and Practical Builder. 8vo. . $5.00 

BELL.— Chemical Phenomena of Iron Smelting : 

An Experimental and Practical Examination of the Circumstances 
which determine the Capacity of the Blast Furnace, the Temperature 
of the Air, and the proper Condition of the Materials to be operated 
upon. By I. Lowthian Bell. Illustrated. 8vo. 

BEMROSE.— Manual of Wood Carving : 

With Practical Illustrations for Learners of the Art, and Original and 
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by Llewellyn Jewitt, F. S. A., etc. With 128 Illustrations. 4to., 
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BICKNELL.— Village Builder, and Supplement : 

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4 HENRY CAREY BAIRD'S CATALOGUE. 

BLENKARN. — Practical Specifications of Works exe- 
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BLINN.— A Practical Workshop Companion for Tin, 
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Japan, Varnishes, Lackers, Cements, Compositions, etc., etc. By 
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12mo $2.50 

BOOTH.— Marble Worker's Manual: 

Containing Practical Information respecting Marbles in general, their 
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BOOTH AND MORPIT.— The Encyclopedia of Che- 
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Embracing its application to the Arts, Metallurgy, Mineralogy, Ge- 
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Refiner in the United States Mint, Professor of Applied Chemistry in 
the Franklin Institute, etc., assisted by Campbell ^Moefit, author 
of " Chemical Manipulations," etc. Seventh edition. Royal 8vo., 
978 pages, with numerous wood-cuts and other illustrations. ' . $5.00 

BOX.— A Practical Treatise on Heat: 

As applied to the Useful Arts ; for the Use of Engineers, Architects, 
etc. By THOMA.S Box, author of " Practical Hydraulics." Illustrated 
by 14 2>lates containing 114 figures. 12rao $54)0 

BOX. — Practical Hydraulics : 

A Series of Rules and Tables for the use of Engineers, etc. By 
Thomas Box. 12mo $2.00 

BROWN.— Five Hundred and Seven Mechanical 
Movements : 

Embracing all those which are most important in Dynamics, Hydrau- 
lics, Hydrostatics, Pneum*atics, Steam Engines, Mill and other" Gear- 
ing, Presses, Horology, and Miscellaneous Machinery ; and including 
many movements never before published, and several of which have 
only recently come into use. By Henry T. Brown, Editor of the 
" American Artisan." In one volume, 12mo. . . $I.(KI 



HENRY CAREY BAIRD'S CATALOGUE. S 

BTJCKMASTER.— The Elements of Mechanical Phy- 
sics : 
By J. C. BucKMASTER, late Student in the Government School of 
Mines ; Certified Teacher of Science by the Department of Science 
and Art ; Examiner in Chemistry and Physics in the Royal College 
of Preceptors; and late Lecturer in Chemistry and Physics of the 
Royal Polytechnic Institute. Illustrated with numerous engravings. 
In one volume, 12mo $1.50 

BULLOCK.— The American Cottage Builder : 

A Series of Designs, Plans, and Specifications, from $200 to $20,000, 
for Homes for the People ; together with Warming, Ventilation, 
Drainage, Painting, and Landscape Gardening. By John Bullock, 
Architect, Civil Engineer, Mechanician, and Editor of " The Rudi- 
ments of Architecture and Building," etc., etc. Illustrated by 75 en- 
gravings. In one volume, 8vo $3.50 

BULLOCK. — The Rudiments of Architecture and 
Building^: 

For the use of Architects, Builders, Draughtsmen, Machinists, Engi- 
neers, and Mechanics. Edited by John Bullock, author of " The 
American Cottage Builder." Illustrated by 250 engravings. In one 
volume, 8vo $3.50 

BURGH. — Practical Illustrations of Land and Marine 
Engines : 

Showing in detail the Modern Improvements of High and Low Pres- 
sure, Surface Condensation, and Super-heating, together witii Land 
and Marine Boilers. By N. P. Burgh, Engineer. Illustrated by 
20 plates, double elephant foUo, with text . ... $21.00 

BURGH.— Practical Rules for the Proportions Ox Mo- 
dern Engines and Boilers for Land and Marine 
Pui'poses. 
By N. P. Bukgh, Engineer. 12mo. . . . . . $1.50 

BURGH.— The Slide-Valve Practically Considered. 

By N. P. Burgh, Engineer. Completely illustrated. 12mo. $2.00 

BYLES.— Sophisms of Free Trade and Popular Politi- 
cal Economy Examined. 

By a Barrister (Sir John Barnard Byles, Judge of Common 

Pleas). First American from the Ninth English Edition, as published 

bv the Manchester Reciprocity Association. In one volume, 12mo. 

^ . $1.25 

PYRN.— The Complete Practical Brewer : 

Or Plain, Accurate, and Thorough Instructions in the Art of Brewing 
Beer, Ale, Porter, including the Process* of making Bavarian Beer, 
all the Small Beers, such as Root-beer, Ginger-pop, Sarsaparilla- 
beer, Mead, Spruce Beer, etc., etc. Adapted to the use of Public 
Brewers and Private Families. By M. La Fayette Byrn, M. D. 
With illustrations. 12mo $1.25 



6 HENRY CAREY BAIRD'S CATALOGUE. 

BYRN.— The Complete Practical Distiller : 

Conijn-ising the ino.st perfect and exact Theoretical and Practical De- 
scription of the Art of Distillation and liectilication ; including all of 
the most recent improvements in distilling apparatus ; instructions 
for preparing spirits from the numerous vegetables, fruits, etc. ; direc- 
tions for the distillation and j)reparation of all kinds of brandies and 
other spints, spirituous and other compounds, etc., etc. By M. L.a 
Fayette Bykn, M. D. Eighth Edition. To which are added. Prac- 
tical Directions for Distilling, from the French of Th. Fling, Brewer 
and Distiller. 12mo $1.50 

BYRNE. — Handbook for the Artisan, Mechanic, and 
Engineer : 

Comprising the Grinding and Sharpening of Cutting Tools, Abrasive 
Processes, Lapidary Work, Gem and Glass Engraving, Varnishing 
and Lackering, Apparatus, Materials and Processes lor Grinding and 
Polishing, etc. By Oliver Bykne. Illustrated by 185 wood en- 
gravings. In one volume, 8vo ' . . $5.00 

BYRNE.— Pocket Book for Railroad and Civil Engi- 
neers : 

Containing New, Exact, and Concise Methods for Laying out Rail- 
road Curves, Switches, Frog Angles, and Crossings ; the Staking 
out of work; Levelling; the Calculation of Cuttings; Embankments; 
Earth-work, etc. By Oliver Byrne. 18mo., full bound, pocket- 
book form $1.75 

BYRNE.— The Practical Model Calculator : 

For the Engineer, Mechanic, Manufacturer of Engine Work, Naval 
Architect, Miner, and Millwright. By Oliver Byrne. 1 volume, 
8vo., nearly COO pages $4.50 

BYRNE.— The Practical Metal- Worker's Assistant: 

Comprising Jfetallurgic Chemistry ; the Arts of Working all ^Metals 
and Alloys; Forging of Iron and Steel; Hardening and Tempering; 
Melting and ^Mixing; Casting and Founding; Works in Sheet Metal; 
The Processes Dependent on the Ductility of the Metals; Soldering; 
and the most Improved Processes and Tools employed by Metal- 
workers. With the Application of the Art of Electro- Jletailurgy to 
Manufacturing Processes ; collected from Original Sources, and from 
the Works of Iloltzapft'el, Bergeron, Leupold, Plumier, Napier, 
ScofTern, Clay, Fairbairn, and others. By Oliver Bykne. A new, 
revised, and improved edition, to which is added An Appendix, con- 
taining The Manufacture of Russian Sheet-Iron. By John 
Percy, M. D., F.R.S. The Manufacture of Malleable Iron 
Castings, and Improvements in Bessemer Steel. By A. A. 
Fesquet, Chemist and Engineer. With over COO Engravings, illus- 
trating every Branch of the Subject. Svo $7.00 

Cabinet Maker's Album of Furniture : 

Comprisin^t a Collection of Designs for Furniture. Illustrated by 48 
Large and Beautifully Engraved Plates. In one vol., oblong $3.50 



HENRY CAREY BAIRD'S CATALOGUE. 7 

CALLINGHAM.— Sign Writing and Glass Emboss- 
ing: 

A Complete Practical Illustrated Manual of the Art. By James 
Callingham. In one volume, 12mo $1.50 

CAMPIN.— A Practical Treatise on Mechanical Engi- 
neering : 

Comprising Metallurgy, Moulding, Casting, Forging, Tools, Work- 
shop Machinery, Mechanical Manipulation, Manufacture of Steam- 
engines, etc., etc. With an Appendix on the Analysis of Iron and 
Iron Ores. By Fkancis Campin, C. E. To which are added. Obser- 
vations on the Construction of Steam Boilers, and Remarks upon 
Furnaces used for Smoke Prevention ; with a Chapter on Explosions. 
By R. Armstrong, C. E., and John Bourne. Rules for Calculating 
the Change Wheels for Screws on a Turning Lathe, and for a Wheel- 
cutting Machine. By J. La NICCA. Management of Steel, Includ- 
ing Forging, Hardening, Tempering, Annealing, Shrinking, and Ex- 
pansion. And the Case-hardening of Iron. By G. Ede. 8vo. Illus- 
trated with 29 plates and 100 wood engravings . . . $6.00 

CAMPIN.— The Practice of Hand-Turning in Wood, 
Ivory, Shell, etc. : 

With Instructions for Turning such works in Metal as may be re- 
quired in the Practice of Turning Wood, Ivory, etc. Also, an Appen- 
dix on Ornamental Turning. By Fkancis Campin ; with Numerous 
Illustrations. 12mo., cloth $2.00 

CAREY.— The Works of Henry C. Carey : 

FINANCIAL CRISES, their Causes and Effects. 8vo. paper . 25 

HARMONY OF INTERESTS: Agricultural, Manufacturing, and 

Commercial. 8vo., cloth . . . . . . . $1.50 

MANUAL OF SOCIAL SCIENCE. Condensed from Carey's " Prin- 
ciples of Social Science." By Kate McKean. 1 vol. 12mo. $2.25 
MISCELLANEOUS WORKS : comprising " Harmony of Interests," 
"Money," "Letters to the President," "Financial Crises," " The 
Way to Outdo England Without Fighting Her," " Resources of 
the Union," " The Public Debt," " Contraction or Expansion ? " 
" Review of the Decade 1857-'67," " Reconstruction," etc., etc. 

Two vols., 8vo., cloth 

PAST, PRESENT, AND FUTURE. 8vo. . . . . $2.50 
PRINCIPLES OF SOCIAL SCIENCE. 3 vols., 8vo., cloth $10.00 
THE SLAVE-TRADE, DOMESTIC AND FOREIGN ; Why it Ex- 
ists, and How it may be Extinguished (1853). 8vo., cloth . $2.00 
LETTERS ON INTERNATIONAL COPYRIGHT (1867) . 50 
THE UNITY OF LAW : As Exhibited in the Relations of Physical, 
Social, Mental, and Moral Science (1872). In one volume, 8vo., 
pp. xxiii., 433. Cloth $3.50 

CHAPMAN.— A Treatise on Ropemaking : 

As Practised in private and public Rope yards, with a Description 
of the Manufacture, Rules, Tables of Weights, etc., adapted to the 
Trades, Shipping, Mining, Railways, Builders, etc. By Robert 
Chapjman. 24mo. ... . . . . . . $1.50 



HENRY CAREY BAIRD'S CATALOGUE. 



COLBURN".— The Locomotive Engine : 

lucluiling a Description of its Structure, Rules for Estimatino- its Capa- 
bilities, and Practical Observations ou its Construction and Mana^'e- 
ment. By Zekau Colburn. Illustrated. A new edition, liimo. 5>L25 

CRAIK. — The Practical American Millwright and 
Miller. 

By p.vviD Ck.\ik, Millwright. Illustrated by numerous wood en- 
gravings, and two folding plates. Svo. . . " . . . $5.00 

DE GRAFF.— The Geometrical Stair Builders' Gmde : 

Being a Plain Practical System of Hand-Railing, embracing' all its 
necessary Details, and Geometrically Illustrated by 2l' Steel En-r'iv- 
ings; together ^rtth the use of the most apuroyed principles of Prac- 
tical Geometry. By SiMON De Graff, Architect. 4to. . $5.00 

DE KONINCK.-DIETZ.-A Practical Manual of Che- 
mical Analysis and Assaying : 
As applied to the Manufacture of Iron from its Ores, and to Cast Iron 
Wrought Iron, and btcel, as found in Commerce. By L L De KoN- 
INCK, Dr. Sc., and E. Dietz, Engineer. Edited with Notes, by Robert 
Mallet F.R S., F.S.G., M.I.C.E., etc. American Edition, Edfted 
with Notes and an Appendix on Iron Ores, by A. A. Fesquet, Chemist 
and Engineer. One volume, 12mo. . " . . . . $2 50 

DUNCAN.— Practical Surveyor's Guide: 
Containing the necessary- information to make any person, of common 
capacity, a finished land surveyor without the aid of a teacher Bv 
Andrew Duxcax. Illustrated. 12mo., cloth. ... 'ai.os 

^^f S^?^~4 Treatise on the Manufacture and Dis- 
tillation of Alcoholic Liquors : 

Comprising Accurate and Complete Details in Regard to Alcohol from 
\yine, Jlolasses Beet.s Grain, Rice, Potatoes, Sorghum, Asphodel 
Fruits, etc. ; with the Distillation and Rectification of Brandy, Whis- 
rZ' vT';-?"^^,"''''- ^^^^''"t^i«'. etc.. the Preparation of Aromatic Wa- 
ters, \ olat^le Oi s or Essences, Sugars, Svrups, Aromatic Tinctures 
Liqueurs Cordial AV ines, Eftervescing Wines, etc., the Adng of Brandy 
and the Improvenient of Spirits, with Copious Directio^^^^s and Tables 
«nd F^r.;?/, f ^//^"^••^.? Spirituous Liquors, etc., etc. Translated 
and Edited from the French of MM. DrPLAls, Aine et Jeune By 
M. McKexxie M.D. To which are added the United States Intermal 
nSLI J^':-!!*^*'';"' ^"'' *''f '^^^e^s"'ent and Collection of Taxes on 
Distilled Spirits. Illustrated by fourteen folding plates and several 
wood engravings. 743 pp., Svo. . . . !^ ^ . . «;io.o„ 

DUSSAUCE.-A General Treatise on the Manufacture 
of Every Description of Soap : 

Comprising the Chemistry of the Art, with Remarks on Alkalies Sa- 
Cfen'T^?"-\^"^^^''t!^" apparatus necessary in a Soap Factory, 
th^al I',*-f "<^f"^"-'' in the manufacture of the various kinds of Soai> 
tituTI ""^^""T- ^'''■'J'^i Edited from xNotes of Larme, Fontenelle 
Malapayre Dufour, a_nd others with large and important additions by 
Prof. H. DUSSAUCE, Chemist. Illustrated. In one Vol., Syo. . $26 00 



HENRY CAREY BAIRD'S CATALOGUE. 9 

DUSSAUCE.— A General Treatise on the Manufacture 
of Vinegar : 

Theoretical and Practical. Comprising the various Methods, by the 
Slow and the Quick Processes, with Alcohol, Wine, Grain, Malt, Cider, 
Molasses, and Beets ; as well as the Fabrication of Wood Vinegar, etc., 
etc. By Prof. H. DusSAUCE. In one volume, 8vo. . . $5.00 

PUSSAUCE.— A New and Complete Treatise on the 
Arts of Tanning, Currying, and Leather Dressing : 

Comprising all the Discoveries and Improvements made in France, 
Great Britain, and the United States. Edited from Notes and Docu- 
ments of Messrs. Sallei-ou, Gi'ouvelle, Duval, Dessables, Labarraque, 
Payen, Rene, De Fontenelle, Malapeyre, etc., etc. By Prof. H. Dus- 
SAUCE, Chemist. Illustrated by 212 wood engravings. 8vo. $25.00 

DUSSAUCE.— A Practical Guide for the Perfumer : 

Being a New Treatise on Perfumery, the most favorable to the Beauty 
without being injurious to the Health, comprising a DescriiDtion of the 
substances used in Perfumery, the Formulae of more than 1000 Prepa- 
rations, such as Cosmetics, Perfumed Oils, Tooth Powders, Waters, 
Extracts, Tinctures, Infusions, Spirits, Vinaigi'es, Essential Oils, Pas- 
tels, Creams, Soajis, and many new Hygienic Products not hitherto 
described. Edited from Notes and Documents of Messrs. Debay, Ln- 
nel, etc. With additions by Prof. H. Dussauce, Chemist. 12mo. 

DUSSAUCE.— Practical Treatise on the Fabrication 

of Matches, Gun Cotton, and Fulminating Powders. 

By Prof. H. Dussauce. 12mo $3.00 

Dyer and Color-maker's Companion: 

Containing upwards of 200 Receipts for making Colors, on the most 
approved principles, for all the various styles and fabrics now in exist- 
ence; with the Scouring Process, and plain Directions for Preparing, 
Washing-off, and Finishing the Goods. In one vol., 12mo. . $1.25 

EASTON.— A Practical Treatise on Street or Horse- 
power Railways. 

By Alexander Easton, C. E. Illustrated by 23 plates. 8vo., 
cloth $3.00 

ELDER.— Questions of the Day : 

Economic and Social. By Dr. William Elder. 8vo. . $3.00 

FAIRBAIRN.— The Principles of Mechanism and Ma- 
chinery of Transmission : 

Comprising the Principles of Mechanism, Wheels, and Pulleys, 
Strength and Proportions of Shafts, Coupling of Shafts, and Engaging 
and Disengaging Gear. By Sir William Pairbairn, C.E., LL.D., 
F.R.S., F.'G.S. Beautifully illustrated by over 150 wood-cuts. In 

one volume, 12mo $2.50 

FORSYTH.—Book of Designs for Headstones, Mural, 
and other Monuments : 
Containing 78 Designs. By James Forsyth. With an Introduction 
by Charles Boutell, M. A. 4to., cloth. , . . . $5.00 



10 HENRY CAREY BAIRD'S CATALOGUE. 



GIBSON. — The American Dyer: 

A Practical Treatise on the Colorin.i^ of Wool, Cotton, Yarn and 
Cloth in three ))arts. Part First gives a descriptive account of the 
Dye t^tull's ; if of vegetable origin, where produced, how cultivated, 
ami how prepared for use; if chemical, their composition, specific 
gravities, and general adaptability, how adulterated, and iiow to de- 
tect tiie adulterations, etc. Part ISecond is devoted to the Coloring of 
Wool, giving recipes for one iuuidred and twenty-nine different colors 
or shiid^'s, and is snpnlied with sixty colored samples of Wool. Part 
Tliird is devoted to tne Coloring of Raw Cotton or Cotton Waste, for 
mixing with Wool Colors in the Manufacture of all kinds of Fabrics, 
gives recij)es for thirty-eight diiferent colors or shades, and is supplied 
witii twenty-four coloreil sainj)les of Cotton Waste. Also, recipes for 
Coloring Beavers, Doeskins, and Flannels, with remarks upon Ani- 
lines, giving recipes for fifteen difterent colors or shades, and nine 
samples of Aniline Colors that will stand both the Fulling and Scour- 
ing process. Also, recipes for Aniline (^olors on Cotton Thread, and 
recii)es for Common Colors on (-otton Yarns. End)racing in all over 
two hundreil recipes for Colors and yiuules, and ninety-four samples 
of Colon'd Wool and Cotton Waste, etc. By RlCIlARB II. GiBSON, 
Practical Dyer and Chemist. In one volume, 8vo. . . $G.OO 

GILBART.— History and Principles of Banking : 

A Practical Treatise. By .lAMES AV. GiLHART, late Manager of the 
Ijondon and Westminster Bank. With additions. In one volume, 
Svo., OUO pages, sheep $5.00 

Gothic Album for Cabinet Makers : 

Coin])rising a Collection of Designs for Gothic Furniture. Illustrated 
by '-'."5 large and beautifully engraved plates. Oblong . . $2.00 

GRANT. — Beet-root Sugar and Cultivation of the 
Beet. 
ByE.B. Grant. 12mo $1.25 

GREGORY.— Mathematics for Practical Men : 

.\dapted to the Pursuits of Surveyors, Architects, ^lochanics, and 
Civil Engineers. By Olinthus GREGORY. Svo., plates, cloth $^^M 

GRISWOLD.— Railroad Engineer's Pocket Compan- 
ion for the Field : 

Comprising Rules for Calculating Deflection Distances and Angles, 
Tangential Distances and Angles, and all Necessary Tables for Engi- 
neers ; also the art of Levelling from Preliminary Survey to the t\)n- 
struclion of Railroads, intended Expressly for the Young Engineer, 
together with Numerous Valuable Rules and Examj)les. By W. 
Griswold. 12mo., tucks $1.75 

GRUNER.— Studies of Blast Furnace Phenomena. 

By M. L. (iitUNER, President of the General Council of luines of 
France, and latelv Professor of Metallurgv at the Ecole des Mines. 
Translated, with tlie Aiithor's sanction, with an Appendix, by L. D. B. 
Gordon, F.R.S.E.. F. as. Illustrated. Svo. . . . $2.50 



HENRY CAREY BAIRD'S CATALOGUE. 11 

GUETTIER.— Metallic Alloys: 

Being a Practical Guide to their Chemical and Physical Properties, 
their Preparation, Composition, and Uses. Translated from the 
French of A. G pettier, Engineer and Director of Foundries, author 
of "La Fouderie en France," etc., etc. By A. A. Fesquet, Chemist 
and Engineer. In one volume, 12mo $3.00 

HARRIS; — Gas Superintendent's Pocket Companion. 

By Harris & Brother, Gas Meter Manufacturers, 1115 and 1117 
Cherry Street, Philadelphia. Full bound in pocket-book form $1.00 

Hats and Felting: 

A Practical Treatise on their Manufacture. By a Practical Hatter. 
Illustrated by Drawings of Machinery, etc. 8vo. . . . $1.25 

HOFMANN.— A Practical Treatise on the Manufac- 
ture of Paper in all its Branches, 

By Carl Hofmann. Late Superintendent of paper mills in Ger- 
many and the United States; recently manager of the Public Ledger 
Paper Mills, near Elkton, Md. Illustrated by 110 wood engravings, 
and five large folding plates. In one volume, 4to., cloth; 398 
pages $15.00 

HUGHES.— American Miller and Millwright's Assist- 
ant. 
By Wm. Carter Hughes. A new edition. In one vol., 12mo. $1.50 

HURST. — A Hand-Book for Architectural Surveyors 
and others engaged in Building: 

Containing Formulse useful in Designing Builder's work. Table of 
"Weights, of the materials used in Building, Memoranda connected 
with Builders' work, Mensuration, the Practice of Builders' Measure- 
ment, Contracts of Labor, Valuation of Property, Summary of the 
Practice in Dilapidation, etc., etc. By J. F. Hurst, C. E. Second 
edition., pocket-book form, full bound $2.00 

JERVIS.— Railway Property : 

A Treatise on the Construction and Management of Railways ; de- 
signed to afford useful knowledge, in the popular style, to the holders 
of this class of property; as well as Railway Managers Officers, and 
Agents. By John B. Jervis, late Chief Engineer of the Hudson 
River Railroad, Croton Aqueduct, etc. In one vol., 12mo., cloth $2.00 

JOHNSTON.— Instructions for the Analysis of Soils, 
Limestones, and Manures. 

By J. F. W. Johnston. 12mo. 



13 HENRY CAREY BAIRD'S CATALOGUE. 

KEENE,— A Hand-Book of Practical Gauging : 

For the Use of Beginners, to which is added, A Chapter on Distilla. 
tion, describing the process in operation at the Custom House lot 
ascertaining the strength of wines. By James B. Keene, of II. M. 
Customs. Svo. $1.25 

KELTjEY.— Speeches, Addresses, and Letters on In- 
dustrial and Financial Questions. 
By Hon. William D. Kelley, M. C. In one volume, 544 pages, 
8vo $3.00 

KENTISH.— A Treatise on a Box of Instruments, 

.\nd the Slide Rule ; with the Theory of Trigonometry and Loga- 
rithms, including Practical Geometry, Sur\-eying, ^Measuring of Tim- 
ber, Cask and :Malt Gauging, Heights, and "Distances. By Thomas 
Kentish. In one volume. ' 12mo. $1.2.5 

KOBELL.—ERNI.— Mineralogy Simplified : 

A ^jhort Method of Determining and Classifying Minei-als, by means 
of simple Chemical Experiments in the Wet Y\'ay. Translated from 
the last German Edition of F. YoN Kobell, with an Introduction to 
Blow-pipe Analysis and other additions. By Henri Eeni, il. D.. 
late Chief Chemist, Department of Agriculture, author of " Coal Oil 
and Petroleum." In one volume, 12mo. .... $2.50 

LANDRIN.— A Treatise on Steel: 

Comprising its Theory, Jletallurgy, Properties, Praetical Working, 
and Use. By M. H. "C. Landrin, Jr., Civil Engineer. Translated 
from the French, with Notes, by A. A. Fesquet, Chemist and Engi- 
neer. With an Appendix on the Bessemer and the ^Martin Processes 
for Manufacturing 8tcel, from the Report of Abram S. Hewitt, United 
States Commissioner to the Universal Exposition, Paris, 1867. In one 
volume, 12mo. $3.00 

LARKIN.— The Praetical Brass and Iron Founder's 
Guide : 

A Concise TreaUse on Brass Founding, Moulding, the Metals and their 
Alloys, etc. : to which are added Recent Improvements in the Manu- 
facture of Iron, Steel by the Bessemer Process, etc., etc. By James 
Larkin, late Conduet(jr of the Brass Foundry Department in Reany, 
Neafie & Co's. Penn Woi-ks. Philadelphia. Fifth edition, revised, 
with Extensive additions. In one volume, 12mo. . . $2.25 

LEA VITT.— Facts about Peat as an Article of Fuel : 

With Remarks upon its Origin and Co'nposition, the Localities in 
which it is found, the Methods of Preparation and Manufacture, and 
the various Uses to which it is applicable ; together with many other 
matters of Practical and Scientific Interest. To which is added a chap- 
ter on the Utilization of Coal Dust with Peat for the Production of an 
Excellent Fuel at Moderate Cost, speciallv adapted for Steam Service. 
By T. H. Leavitt. Third edition. 12m'o. . . . $1.75 



HENRY CAREY BAIRD'S CATALOGUE. l3 

LEROUX, C— A Practical Tx'eatise on the Manufac- 
ture of Worsteds and Carded Yarns : 

Comprising Practical Mechanics, with E,ules and Calculations applied 
to Spinning; Sorting, Cleaning, and Scouring Wools; the English 
and French methods of Combing, Drawing, and Spinning Worsteds 
and Manufacturing Carded Yarns. Translated from the French of 
Charles Leroux, Mechanical Engineer, and Superintendent of a 
Spinning Mill, by HoEATio Paine, M. D., and A. A. Fesquet, 
Chemist and Engineer. Illustrated by 12 large Plates. To which is 
added an Apj^endix, containing extracts from the Reports of the Inter- 
national Jury, and of the Artisans selected by the Committee appointed 
by the Council of the Society of Arts, London, on Woollen and Worsted 
Machinery and Fabrics, as exhibited in the Paris Universal Exposi- 
tion, 1867. 8vo., cloth $5.00 

LESLIE (Miss),— Complete Cookery: 

Directions for Cookery in its Various Branches. By MisS Leslie. 
60th thousand. Thoroughly revised, with the addition of New Re- 
ceipts. In one volume, 12mo., cloth $1.50 

LESLIE (Miss).— Ladies' House Book: 
A Manual of Domestic Economy. 20th revised edition. 12mo., cloth. 

LESLIE (Miss).— Two Hundred Eeceipts in French 
Cookery. 

Cloth, 12mo. 

LIEBER.— Assayer's Guide : 

Or, Practical Directions to Assayers, Miners, and Smelters, for the 
Tests and Assays, by Heat and by Wet Processes, for the Ores of all 
the principal Metals, of Gold and Silver Coins and Alloys, and of 
Coal, etc. By Oscar M. Liebee. 12mo., cloth. . . .§1.25 

LOTH.— The Practical Stair Builder: 

A Complete Treatise on the Art of Building Stairs and Hand-Rails, 
Designed for Carpenters, Builders, and Stair-Builders. Illustrated 
with Thirty Original Plates. By C. Edward Loth, Professional 
Stair-Builder. One large 4to. volume. .... $10.00 

LOVE. — The Art of Dyeing, Cleaning, Scouring, and 
Finishing, on the Most Approved English and 
French Methods: 

Being Practical Instructions in Dyeing Silks, Woollens, and Cottons, 
Feathers, Chips, Straw, etc. Scouring and Cleaning Bed and Window 
Curtains, Carpets, Rugs, etc. French and English Cleaning, any 
Color or Fabric of Silk, Satin, or Damask. By Thomas Love, a 
Working Dyer and Scourer. Second American Edition, to which are 
added General Instructions for the Use of Aniline Colors. In one 
volume, 8vo., 343 pages. $5.00 



14 HENRY CAREY BAIRD'S CATALOGUE 

MAIN and BROWN.— Questions on Subjects Con- 
nected with the Marine Steam-Engine : 
And Examination Papers : with Hints for their Solution. By Thomas 
J. Main, Professor of Mathematics, Roval Naval College, and Thomas 
Brown, Chief Engineer, R. N. 12mo", cloth. . . . $1.50 

MAIN and BROWN.— The Indicator and Dynamo- 
meter : 

With their Practical Applications to the Steam-Engine. By Thomas 
J. Main, M. A. F. R., Assistant Professor Royal Naval College, Ports- 
mouth, and Thomas Brown, Assoc. Inst. C. E., Chief Engineer, R. 
N., attached to the Royal Naval College. Illustrated. Prom the 
Fourth London Edition. 8vo $1.50 

MAIN and BROWN.— The Marine Steam-Engine. 
By Thomas J. Main, F. R. ; Assistant S. Mathematical Professor at 
the Royal Naval College, Portsmouth, and Thomas Brown, Assoc. 
Inst. C. E., Chief Engineer R. N. Attached to the Royal Naval Col- 
lege. Authors of " Questions connected with the Marine Steam-En- 
gine," and the " Indicator and Dynamometer." With numerous Illus- 
trations. In one volume, 8vo. ...... $5.00 

MARTIN.— Screw-Cutting Tables, for the Use of Me- 
chanical Engineers : 

Showing the Proper Arrangement of Wheels for Cutting the Threads 
of Screws of any required Pitch ; with a Table for Making the Uni- 
versal Gas-Pii^e Thread and Taps. By W. A. Martin, Engineer. 
8vo 60 

Mechanics' (Amateur) Workshop: 
A treatise containing plain and concise directions for the manipula- 
tion of Wood and Metals, including Casting, Forging, Brazing, Sol- 
dering, and Carpentrv. By the author of the " Lathe and its Uses." 
Third edition. Illustrated. 8vo $3.00 

MOLESWORTH.— Pocket-Book of Useful Formulae 
and Memoranda for Civil and Mechanical Engi- 
neers. 
By Guilford L. Molesworth, Member of the Institution of Civil 
Engineers, Chief Resident Engineer of the Ceylon Railway. Second 
American, from the Tenth London Edition. In one volume, full 
bound in pocket-book form $1.00 

NAPIER.— A System of Chemistry Applied to Dyeing. 

By James Napier, F. C. S. A New and Thoroughly Revised Edi- 
tion. Completely brought up to the present state of the Science, inclu- 
ding the Chemistry of Coal Tar Colors, by A. A. Fesquet, Chemist 
and Engineer. With an Appendix on Dyeing and Calico Printing, as 
shown at the Universal Exposition, Paris, 1867. Illustrated. In one 
volume, 8vo., 422 pages $5.00 



HENRY CAREY BAIRD'S CATALOGUE, 15 



NAPIEK.— Manual of Electro-Metallurgy : 

Including the Application of the Art to Manufacturing Processes. By 
James JNapiee. Fourth American, from the Fourth London edition, 
revised and enlarged. Illustrated by engravings. Inonevol., 8vo. $2.00 

NASON.— Table of Reactions for Qualitative Chemical 
Analysis. 
By Heney B. Nason, Professor of Chemistry in the Rensselaer Poly- 
technic Institute, Troy, New York. Illustrated by Colors. 

NEWBERY.— Gleanings from Ornamental Art of 
every style : 

Drawn from Examples in the British, South Kensington, Indian, 
Crystal Palace, anc' ^ther Museums, the Exhibitions of 1851 and 1862, 
and the best Engliu/i and Foreign works. In a series of one hundred 
exquisitely drawn Plates, containing many hundred examples. Bj^ 
ROBEET Newbeey. 4to. $12.50 

NICHOLSON —A Manual of the Art of Bookbinding : 

Containing full instructions in the different Branches of Forwa?ding, 
Gilding, and Finishing. Also, the Art of Marbling Book-edges and 
Paper. By James B. Nicholson. Illustrated. 12mo., cloth. $2.25 

NICHOLSON.— The Carpenter's New Guide: 

A Complete Book of Lines for Carpenters and Joiners. By Petee 
Nicholson. The whole carefully and thoroughly revised by H. K. 
Davis, and containing numerous new and improved and original De- 
signs for Roofs, Domes, etc. By Samuel Sloan, Architect. Illus- 
trated by 80 plates. 4to. 

NORRIS.— A Hand-book for Locomotive Engineers 
and Machinists : 

Comprising the Proportions and Calculations for Constructing Loco- 
motives; Manner of Setting Valves ; Tables of Squares, Cubes, Areas, 
■ etc., etc. By Septimus Noeeis, Civil and Mechanical Engineer. 
New edition. Illustrated. 12mo., cloth $1-50 

NYSTROM.— On Technological Education, and the 
Construction of Ships and Screw Propellers : 

For Naval and Marine Engineers. By John W. Nysteom, late Act- 
ing Chief Engineer, U. S. N. Second edition, revised with additional 
matter. Illustrated by seven engravings. 12mo. . . $1.50 

O'NEILL.— A Dictionary of Dyeing and Calico Print- 
ing : 

Containing a brief account of all the Substances and Processes m use 
in the Art of Dyeing and Printing Textile Fabrics; with Practical 
Receipts and Scientific Information. By Chaeles O'Neill, Ana- 
Ivtical Chemist ; Fellow of the Chemical Society of London ; Member 
of the Literarv and Philosophical Society of Manchester ; Author of 
" Chemistry of Calico Printing and Dyeing." To which is added an 
Essay on Coal Tar Colors and their application to Dyeing and Calico 
Printing. By A. A. Fesquet, Chemist and Engineer. With an Ap- 
pendix on Dyeing and Calico Printing, as shown at the Universal 
Exposition, Paris, 1867. In one volume, 8vo., 491 pages. . $5.00 



1(3 HENRY CAREY BAIRD'S CATALOGUE. 



ORTON.— Underground Treasures : 

How and AVhere to Find Them. A Key for the Ready 'Determination 
of all the Useful Minerals witliin the United States. By James 
Orton, a. M. Illustrated, 12mo ^1 50 

OSBORN.— American Mines and Mining: 

Theoretically and Practically Considered. By Prof. H S OsBORN 
Hlustrated by numerous engravings. 8vo. (Inprepareuion.) 

OSBORN-.— The Metallurgy of Iron and Steel : 

Theoretical and Practical in nil its Branches ; with special reference 
to American Materials and Processes. By H. S Csboen LL D 
Professor of Mining and Metallurgy in Lafayette College' Easton' 
Pennsylvania. Illustrated by numerous large folding plates and 
wood-engravings. 8vo. «I7 50 

OVERMAN.— The Manufacture of Steel : 

Containing (he Practice and Princi])les of Working and Making Steel. 
A Handbook for Blacksmiths and Workers in Steel and Iron Wagon 
Makers Die Sinkers, Cutlers, and Manufacturers of Files and Hard- 
ware, of Steel and Iron, and for Men of Science and Art By Fred- 
erick OvERM.\N, Mining Engineer, Author of the " iManufa'cture of 
Iron, etc. A new, enlarged, and revised Edition. By A. A. Fesouet 
Chemist and Engineer _ $1 50 

OV^RMAN.-The Moulder and Pounder's Pocket 

A Treatise on Moulding and Founding in Green-sand, Dry-sand. Loam 
and Cement; the Moulding of Machine Frames, Mill-gear, Hollow' 
ware, Ornaments, Trinkets, Bells, and Statues ; Descript?on of Moulds 
for Iron, Bronze, Brass, and other Metals ; Plaster of Paris, Sulphur 
Wa.x, and other articles commonly used in Casting; the Construction 
of Melting Furnaces, the Melting and Founding of 'Metals; the Com" 
position of Alloys and their Nature. AVith aif Appendix containing 
fchK H 'U^°^''' .^^"5"' y-^'-^i^l^es and Colors for Castings; also^ 
lables on the Strength and other qualities of Cast Metals By Fred 

Sn"lvUh4o?!^'^^?"-^'"-^' ^-^^^^ of -The ManufSe 
ot Iron. With 42 Illustrations. 12mo $2.00 

Painter, Gilder, and Varnisher's Companion • 

?f pSS Sn? V^'^")'"'"ni" ^^T'-J:*l"»g relating to the Arts 
or rainting. Gilding, Varnishing, Glass-Staninsr Grainino- ]\fnrhlir,tr 

TeSs'Yof tlif'S'?-" "^ f'ff'r'' C--'^ Painlin'amrVarnTsE^^^^^^ 
iafL . /.. 1v ^"'" ""^ Adulterations in Oils, Colors, etc. • anrfa 
b atement o the Diseases to which Painters are peculiarly liable wth 

In imSx'"V^n'?'-'"'^;.^^ Sixteenth Eciition. Revised wE 
an Appendix. Containing Colors and Coloring -Theoretica and 
Practical. Comprising descriptions of a great variety efSional 
Pigments, their Qualities and ITses, to whi^are added Dryer anj 
Modes and Operations of Painting, etc. To,^ether with Chevreul's 
Principles of Harmony and Contrast of Colors! 12mo cloth ll 50 



HENRY CAREY BAIRD'S CATALOGUE. 17 

PALLETT.— The Miller's, Millwright's, and Engineer's 
Guide. 
By Henky Pallett. Illustrated. In one volume, 12mo. $3.00 

PERCY —The Manufacture of Russian Sheet-Iron. 

By John Percy, M.D., F.R.S., Lecturer on Metallurgy at the Royal 
School of Mines, and to The Advanced Class of Artillery Officers at 
the Royal Artillery Institution, Woolwich ; Author of " Metallurgy." 
With Illustrations. 8vo., paper 50 cts. 

PERKINS.— G-as and Ventilation. 

Practical Treatise on Gas and Ventilation. With Special Relation to 
Illuminating, Heating, and Cooking by Gas. Including Scientific 
Hdps to Engineer-students and others. With Illustrated Diagrams. 
By E. E. Pekkins. 12mo., cloth $1.25 

PERKINS and STOWE.— A New Guide to the Sheet- 
iron and Boiler Plate Roller : 

Containing a Series of Tables showing the Weight of Slabs and Piles 
to produce Boiler Plates, and of the Weight of Piles and the Sizes of 
Bars to produce Sheet-iron; the Thickness of the Bar Gauge in 
decimals ; the Weight per foot, and the Thickness on the Bar or Wire 
Gauge of the fractional parts of an inch ; the Weight per sheet, and 
the Thickness on the Wire Gauge of Sheet-iron of various dimensions 
to weigh 112 lbs. per bundle; and the conversion of Short Weight 
into Long Weight, and Long Weight into Short. Estimated and col- 
lected by G. H. Pekkins and J. G. Stowe $2.50 

PHILLIPS and DARLINGTON —Records of Mining 
and Metallurgy ; 

Or Facts and Memoranda for the use of the Mine Agent and Smelter. 
By J. Arthur Phillips, Mining Engineer, Graduate of the Imperial 
School of Mines, France, etc., and John Darlington. Illustrated 
by numerous engraviugs. In one volume, 12mo. . . $1.50 

PROTEAUX.— Practical Guide for the Manufacture 
of Paper and Boards. 

By A. Proteaux, Civil Engineer, and Graduate of the School of Arts 
and Manufactures, and Director of Thiers' Paper Mill, Puy-de-D6me. 
With additions, by L. S. Le Normand. Translated from the French, 
with Notes, by Horatio Paine, A. B., M. D. To which is added a 
Chapter on the Manufacture of Paper from Wood in the United 
States, by Henry T. Brown, of the " American Artisan." Illus- 
trated by six plates, containing Drawings of Raw Materials, Machi- 
nery, Plans of Paper-Mills, etc., etc. 8vo $10.00 

EEGNAXTLT,— Elements of Chemistry. 

By M. V. Regnaui.t. Translated from the French by T. Forrest 
Betton, M. D., and edited, with Notes, by James C. Booth, Melter 
and Refiner U. S. Mint, and Wm. L. Faber, Metallurgist and Mining 
Engineer. Illustrated by nearly 700 wood engravings. Comprising 
nearly 1500 pages. In two volumes, 8vo., cloth. . . . $7.50 



18 HEXllY CAREY BAIRD'S CATALOGUE. 



BEID.— A Practical Ti'eatise on the Manufacture of 
Portland Cement: 
Bv lIi'.NKY Ukii), C. K. To which is added a Translation of M. A, 
I>ip<)wit/.'s Work, doscribiiiij a New Metiiod ado])ted in Germany for 
Miinnfaeturiiiij that Cement, by W. F. IIEID. Illustrated by plates 
and wood engravings. 8vo . $7.20 

RIFFAULT, VERGNAUD, and TOUSSAINT.— A 
Practical Treatise on the Manufacture of Var- 
nishes. 
l{y M M. UiFKAiu/r, ViniGNAun, and Toussaint. llevised and 
iMlited by M. F. M ALKi'KYUK and Dr. Emil WiNCKLER. Illustrated. 
In one volume, >Svo. [J» prcparatioii.) ^ 

RIFFAULT, VERGNAUD, and TOUSSAINT.— A 
Practical Treatise on the Manufacture of Colors 
for Painting : 

Containing the best Fornuihe and the Froeesses the Newest and in 
most General Use. By M M. RiFKAii/r, Vkrgnaud, and TousSAiNT. 
Revised and Edited by M. F. ^Mai.kimoyrk and Dr. Emil WiNCKLEii. 
Translated from the French by A. A. Fe.sqI'ET, Chemist and iMigi- 
neer. Illustrated by Engravings. In one volume, G50 pages, 8vo. 

$7.50 

ROBINSON.— Explosions of Steam Boilers: 

How tiiey are Caused, and how they may be Prevented. By J. R. 
RoiUNsoN, (Steam Engineer. 12mo 

ROPER. — A Catechism of High Pressure or Non- 
Condensing Steam-Engines : 

Ineluding ilie Modelling, Constructing, Running, and Management 
of Steam Engines and Steam Boilers. With Illustrations. By 
Stephen Ropek, Engineer. Full bound tucks . . . $2.00 

ROSELEUR.— Galvanoplastic Manipulations : 

A Practical (inide for the (iold and f^ilvcr Elcctro-]ilater and the 
, (.lalvanojthistic Operator. Translated from the French of Alfkep 
ROSELEVK, Ciiemist, Professor of tl\e (.Jalvanoplastic Art, Manufaetu- 
rer of Chemicals, Gold and Silver Electro-plater. By A. A. Fesqtjet, 
Chemist and Engineer. Illustrated bv over 127 Engravings on Avood. 

,8vo., 4!15 pages. " . . . . ' S7.60 

;jr^- T/i is Trratisr is the fullest a nd bi/ far the best on th is subject ever 
published in the United States. 

SCHINZ. — Researches on the Action of the Blast 
Furnace. 
By Chaki.ks Scuinz. Translated from the German with the special 
permission of the Author by Wii.Li.\M II. Maw and MoKiTZ Mui.- 
m:k. With an A|)pendi.K written by the .\uthor expressly for this 
edition. Illustrated by seven i)lates, containing 28 figures. In one 
volume, 12mo. 



HENRY CAREY BAIRD'S CATALOGUE. 19 

SHAW.— Civil Architsicture : 

Being a Complete Theoretical and Practical System of Building, con- 
taining the Fundamental Princijjles of the Art. By Edward Shaw, 
Architect. To which is added a Treatise on Gothic Architecture, etc. 
By Thomas W. Silloway and George M. Harding, Architects. 
The whole illustrated by One Hundred and Two quarto plates finely 
engraved on copper. Eleventh Edition. 4to., cloth. . $10.00 

SHUNK.— A Practical Treatise on Bailway Curves 
and Location, for Young Engineers. 

By William F. Siiunk, Civil Engineer. 12rao. . . $2.00 

SLOAN. — American Houses : 

A variety of Original Designs for Rural Buildings. Illustrated by 26 
colored Engravings, with Desci'iptive References. By Samuel Sloan, 
Architect, author of the " Model Architect," etc., etc. 8vo. $1.50 

SMEATOW.— Builder's Pocket Companion: 

Containing the Elements of Building, Surveying, and Architecture ; 
with Practical Rules and Instructions connected with the subject. 
By A. C. Smeaton, Civil Engineer, etc. In one volume, 12mo. $1.50 

SMITH.— A Manual of Political Economy. 

By E. Pesiiine Smith. A new Edition, to which is added a full 
Index. 12rao., cloth $1.25 

SMITH.— Parks and Pleasure Grounds: 

Or Practical Notes on Country Residences, Villas, Public Parks, and 
Gardens. By Charles H. .T. Smith, Landscape Gardener and 
Garden Architect, etc., etc. 12mo. $2.25 

SMITH.— The Dyer's Instructor: 

Comprising Practical Instructions in the Art of Dyeing Silk, Cotton, 
Wool, and Worsted, and Woollen Goods : containing nearly 800 
Receipts. To which is added a Treatise on the Art of Padding; and 
the Printing of Silk Warps, Skeins, and Handkerchiefs, and the 
various Mordants and Colors for the different styles of such work. 
By David Smith, Pattern Dyer. 12mo., cloth. . . . $3.00 

SMITH.— The Dyer's Instructor: 

Comprising Practical Instructions in the Art of Dyeing Silk, Cotton, 
Wool, and Worsted and Woollen Goods. Third Edition, with many 
additional Receipts for Dyeing the New Alkaline Blues and Night 
Greens, ivitk Dyed Patterns affixed. 12mo., pp. 394, cloth. . $10.50 

STEWART.— The American System. 
Speeches on the Tariff Question, and on Internal Improvements, princi- 
pally delivered in the House of Representatives of the United States. 
By Andrew Stewart, late M. C. from Pennsylvania. With a Portrait, 
and a Biographical Sketch. In one volume, 8vo., 407 pages. $3.00 



20 HENRY CAREY BAIRD'S CATALOGUE. 



STOKES. — Cabinet-maker's and Upholsterer's Com- 
panion : 

Comprising the Rudiments and Principles of Cabinet-making and Up- 
holstery, with Familiar Instructions, illustrated by Examples for 
attaining a Proliciency in the Art of Drawing, as applicable to Cabi- 
net-work ; the Processes of Veneering, Inlaying, and 13uhl-work ; the 
Art of Dyeing and Staining Wood, Bone, Tortoise Shell, etc. Direc- 
tions for Lackering, Japanning, and Varnishing; to make French 
Polish; to ])rcpare the Best Glues, Cements, and Compositions, and a 
number of Receipts particularly useful for workmen generally. By 
J.Stokes. In one volume, 12mo. With Illustrations. . $1.2;j 

Strength and other Properties of Metals: 

Rejjorts of Experiments on the Strength and other Properties of Metals 
for Cannon. With a Description of the Machines for testing Metals, 
and of the Classification of Cannon in service. By Officers of the Ord- 
nance Department U. S. Army. By authority of the Secretary of War. 
Illustrated by 25 large steel plates. In one volume, 4to. . $10.00 

SULLIVAN.— Protection to Native Industry. 

By Sir Edward Sillivan, Baronet, author of "Ten Chapters on 
Social Reforms." In one volume, 8vo $1.")0 

Tables Showing the Weight of Round, Square, and 
Flat Bar Ii-on, Steel, etc., 

By ileasurcment. Cloth. ........ 63 

TAYLOR.— Statistics of Coal : 

Including Mineral Bituminous Substances employed in Arts and 
Manufactures; with their Geographical, Geological, and Commercial 
Distribution and Amount of Production and Consumption on the 
American Continent. With Incidental Statistics of the Iron Manu- 
facture. By R. C. Taylor. Second edition, revised by S. S. Hal- 
DEMAN. Illustrated by five Maps and nianv wood engravings. 8vo., 
cloth '. . . . $10.00 

TEMPLETON.— The Practical Examinator on Steam 

and the Steam-Engine : 

With Instructive References relative thereto, arranged for tiie Use of 

Engineers, Students, and others. Bv Wm. Templeton, Engineer. 

12mo ■ $1.25 

THOMAS.— The Modern Practice of Photography. 

By R. W. Thomas, F. C. S. 8vo., cloth 75 

THOMSON.— Freight Charges Calculator. 

By Andrew Thomson, Freight Agent. 24mo. . . . $1.25 

TURNING: Specimens of Fancy Turning Executed 

on the Hand or Foot Lathe: 

With Geometric, Oval, and Eccentric Chucks, and Elliptical Cutting 

Frame. By an Amateur. Illustrated by 30 exquisite Photographs. 

4to $3.00 



HENRY CAREY BAIRD'S CATALOGUE. 21 

Turner's (The) Companion: 

Containing Instructions in Concentric, Elliptic, and Eccentric Turn- 
ing : also various Plates of Cliuclis, Tools, and Instruments ; and Di- 
rections for using tlie Eccentric Cutter, Drill, Vertical Cutter, and 
Circular Rest ; witli Patterns and Instructions for working them. A 
new edition in one volume, 12mo. $1.50 

TJRBIW.— BRITLL.— A Practical Guide for Puddling 

iron and Steel. 

By Ed. UEBi:Nr, Engineer of Arts and Manufactures. A Prize Essay 

read before the Association of Engineers, Graduate of the School of 

Mines, of Liege, Belgium, at the Meeting of 1865-(). To which is added 

• A COMPAEISON OF THE RESISTING PROPKETIES OP IRON AND STEEL. 

By A. B-RULL. Translated from the French by A. A. Fesquet, Che- 
mist and Engineer. In one volume, 8vo $1.00 

VAILE.— Galvanized Iron Cornice-Worker's Manual/ 

Containing Instructions in Laying out the Different Mitres, and Ma- 
king Patterns for all kinds of Plain and Circular Work. Also, Tables 
of Weights, Areas and Circumferences of Circles, and other Mattet 
calculated to Benefit the Trade. By Charles A. Vaile, Superin- 
tendent " Richmond Cornice Works," Richmond, Indiana. Illustra- 
ted by 21 Plates. In one volume, 4to $5.00 

VILLE.— The School of Chemical Manures : 

Or, Elementary Principles in the Use of Fertilizing Agents. From the 
French of M. George Ville, by A. A. Fesquet, Chemist and Engi- 
neer. With Illustrations. In one volume, 12 mo. . . $1.25 

VOGDES.— The Architect's and Builder's Pocket Com- 
panion and Price Book: 

Consisting of a Short but Comprehensive Epitome of Decimals, Duo- 
decimals, Geometry and Mensuration ; with Tables of U. S. Measures, 
Sizes, Weights, Strengths, etc., of Iron, Wood, Stone, and various 
other Materials, Quantities of Materials in Given Sizes, and Dimen- 
sions of Wood, Brick, and Stone ; and a full and complete Bill of 
Prices for Carpenter's Work ; also. Rules lor Computing and Valuing 
Brick and Brick Work, Stone Work, Painting, Plastering, etc. By 
Frank W. Vogdes, Architect. Illustrated. Full bound iu pocket- 
book form ^2.00 

Bound in cloth. 1-50 

WARN.— The Sheet-Metal Worker's Instructor: 

For Zinc, Sheet-Iron, Copper, and Tin-Plate Workers, etc. Contain- 
ing a selection of Geometrical Problems; also. Practical and Simple 
Rules for describing the various Patterns required in the ditFerent 
branches of the above Trades. By Reuben H. Warn, Practical Tin- 
plate Worker. To which is added an Appendix, containing Instruc- 
tions for Boiler Making, Mensuration of Surfaces and Solids, Rules for 
Calculating the Weights of different Figures of Iron and Steel, Tables 
of the Weights of Iron, Steel, etc. Illustrated by 32 Plates and 37 
Vv'ood Engravings. 8vo. $3-*^'^ 



22 HENRY CAREY BAIRD'S CATALOGUE. 

WATSON.— A Manual of the Hand-Lathe: 

Comprising Concise Dii-ections for working Metals of all kinds, Ivory, 
Bone and Precious Woods ; Dyeing, Coloring, and French Polishing ; 
Inlaying by Veneers, and various methods practised to produce Elabo- 
rate work with Dispatch, and at Small Expense. By Egbert P. 
Watson, late of " The Scientific American," Author of " The Modern 
Practice of American Machinists and Engineers." Illustrated by 78 
Engravings $1.50 

\;^ATSON. — The Modern Practice of American Ma- 
chinists and Engineers: 

Including the Construction, Application, and Use of Drills, Lathe 
Tools, Cutters for Boring Cylinders, and Hollow Work Generally, 
with the most Economical Speed for the same ; the Results verified by 
Actual Practice at the Lathe, the Vice, and on the Floor. Together 
with Workshop Management, Economy of Manufacture, the Steam- 
Engine, Boilers, Gears, Belting, etc., etc. By Egbert P. Watson, 
late of the " Scientific American." Illustrated by 86 Engravings. Id 
one volume, 12mo $2.50 

WATSON.— The Theory and Practice of the Art of 
Weaving by Hand and Power : 

With Calculations and Tables for the use of those connected with the 
Trade. By John Watson, Manufacturer and Practical Machine 
Maker. Illustrated by large Drawings of the best Power Looms. 
8vo $7.50 

WEATHERLY.— Treatise on the Art of Boiling Su- 
gar, Crystallizing, Lozenge-making, Comfits, Gum 
Goods. 
12mo $2.00 

WILL. — Tables for Qualitative Chemical Analysis. 

By Professor Heinrich Will, of Giessen, Germany. Seventh edi- 
tion. Translated by Charles F. Himes, Ph. D., Professor of Natu- 
ral Science, Dickinson College, Carlisle, Pa. . . . $1.50 

WILLIAMS.— On Heat and Steam: 

Embracing New Views of Vaporization, Condensation, and Explosions. 
By Charles Wye Williams, A. I. C. E. Illustrated. 8vo. $3.50 

WOHLER.— A Hand-Book of Mineral Analysis. 

By F. WoHLER, Professor of Chemistry in the University of Gcittin- 
gen. Edited by Henry B. Nason, Professor of Chemistry in the 
Rensselaer Polytechnic Institute, Troy, New York. Illustrated. In 
one volume, 12mo $3 00 

WOBSSAM.— On Mechanical Saws: 

From the Transactions of the Society of Engineers, 1869. By S. W. 
WORSSAM, Jr. Illustrated by 18 large plates. 8vo. . . $2.60 



HENRY CAREY BAIRD'S CATALOGUE. 23 



RECENT ADDITIONS TO OUR UST. 



AUERBACH. — Anthracen : Its Constitution, Properties, Man- 
ufacture, and Derivatives, including Artificial Alizarin, An- 
thrapurpurin, with their applications in Dyeing and Printing. 

By G. Atjekbach. Translated and edited by Wm. Crookes, F. R. S. 

8vo. $5.00 

BECKETT. — Treatise on Clocks, Watches and Bells. 
By Sir Edmund Beckett, Bart. Illustrated. 12mo. . $1.75 

BARLOW. — The History and Principles of Weaving, by Hand 
and by Power. 

Several Hundred Illustrations. 8vo. . . . ■ . . $10.00 
BOURNE. — Recent Improvements in the Steam Engine. 

By John Bourne, C. E. Illustrated. 16mo. . . . $1.50 
CLARK. — Fuel : Its Combustion and Economy. 

By D. KiNNEAR Clark, C. E. 144 Engravings. 12mo. . $1.50 
CRISTIANI.— Perfumery and Kindred Arts. 

By R. S. Cristiani. 8vo. $5.00 

COLLENS.— The Eden of Labor, or the Christian Utopia. 

12mo. Paper, $1.00; Cloth, $1.25 

CUPPER.— The Universal Stair Builder. 

Illustrated by 29 plates. 4to. . . . . . . $2.50 

COOLEY. — A Complete Practical Treatise on Perfumery. 

By A. J. CoOLEY. 12mo $1.50 

DAVIDSON. — A Practical Manual of House Painting, Grain- 
ing, Marbling and Sign W^riting : 

With 9 Colored Illustrations of Woods and Marbles, and many Wood 
Engravings. 12mo. $3.00 

EDWARDS. — A Catechism of the Marine Steam Engine. 

By Emory Edwards. Illustrated. 12mo. . . . $2.00 

HASERICK.— The Secrets of the Art of Dyeing Wool, Cotton, 
and Linen : 

Including Bleaching and Coloring Wool and Cotton Hosiery and 
Random Yarns. By E. C. Haserick. Illustrated by 323 Dyed Pat- 
terns of the Yarns or Fabrics. 8vo $25.00 

HENRY.— The Early and Later History of Petroleum. 
By J. T. Henry. Illustrated. 8vo. . . . . . . $4.50 



24 HENRY CAREY BAIRD'S CATALOGUE. 



^1 



KELLOGG. — A New Monetary System. 
By Ed. Kellogg. Fifth Edition. Edited by M.^VKY Kellogg 
Putnam. 12mo. Paper, $1.00; Cloth, .... $1.50 

KEMLO. — Watch Repairer's Hand-Book. 

Illustrated. 12mo. $1.25 

MORRIS. — Easy Rules for the Measurement of Earthworks by 
means of the Prismoidal Formula. 

By Elwood Morris, C. E. Svo. $1.50 

McCULLOCH.— Distillation, Brewing and Malting. 

By J. C. McCuLLOCH. 12mo $1.00 

NEVILLE.— Hydraulic Tables, Co-Efficients, and Formulae 
for Finding the Discharge of Water from Orifices, Notches, 
Weirs, Pipes, and Rivers. 
Illustrated. 12mo $5.00 

NICOLLS.— The Railway Builder. 

A Hand-book for Estimating the Probable Cost of American Railway 
Construction and Equipment. By Wm. J. NicOLLS, C. E. Pocket- 
book Form $2.00 

NORMANDY.— The Commercial Hand-book of Chemical 
Analysis. 
By H. M. NOAD, Ph. D. 12mo $5.00 

PROCTOR.— A Pocket-Book of Useful Tables and Formulae 
for Marine Engineers. 
By Frank Proctor. Pocket-book Form. . . . $2.00 

ROSE. — The Complete Practical Machinist : 
Embracing Lathe Work, Vise Work, Drills and Drilling, Taps and 
Dies, Hardening and Tempering, the Making and Use of Tools, etc., 
etc. By Joshua Rose. 130 Illustrations. 12mo. . . $2.50 

SLOAN. — Homestead Architecture. 
By Samuel Sloan, Architect. 200 Engravings. Svo. . $3.50 

SYME. — Outlines of an Industrial Science. 
By David Syme. 12nio $2.0P 

WARE.— The Coachmaker's Illustrated Hand-Book. 

Fully Illustrated. Svo. $3.00 

WIGHTWICK.— Hints to Young Architects. 

Numerous Wood Cuts. l2mo $2.00 

WILSON. — First Principles of Political Economy. 

12nio $1.50 

WILSON.— A Treatise on Steam Boilers, their Strength, Con- 
struction, and Economical Working. 
By RoBT. Wilson. Illustrated. 12mo $2.50 



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